What to Expect When Borrowing from Lending Club • Part-Time Money®

How Does Lending Club Work?

LendingClub screens potential borrowers and services the loans once they’re approved. The risk: Investors – not LendingClub – make the final decision whether or not to lend the money.

That decision is based on the LendingClub grade, utilizing credit and income data, assigned to every approved borrower. That data, known only to the investors, also helps determine the range of interest rates offered to the borrower.

LendingClub’s typical annual percentage rate (APR) is between 5.99% and 35.89%. There is also an origination fee of 1% to 6% taken off the top of the loan.

Once approved, your loan amount will arrive at your bank account in about one week. There’s a monthly repayment schedule that stretches over three to five years (36-60 monthly payments).

LendingClub loans are generally pursued by borrowers with good-to-excellent credit (scores average 700) and a low debt-to-income ratio (the average is 12%). Borrowers can file a joint application, which could lead to a larger loan line because of multiple incomes.

LendingClub probably isn’t the best option for borrowers with bad credit. That would bring a high interest rate and steep origination fee, meaning you could probably do better with a different type of loan.


Is Lending Club Right For You?

Are you an investor looking to earn more than the going rate?

Are you a borrower wanting to pay less than what the banks are charging?

Lending Club had been transforming the banking system because of their peer-to-peer lending model that made those exact promises. And after I got my first taste of P2P investing, I realized I had to do a Lending Club review. It was a service suitable for those looking to invest as little as $1,000 or as much as $20,000. And they offered a multitude of loan products, from personal to medical to business — many collateral-free.

That said, there are some downsides, or at least things to be aware of.

I’ll cover the in and outs of peer-to-peer lending through Lending Club from 3 different perspectives:

  • The investor
  • The borrower
  • My personal experience

Who Should Get a LendingClub Loan

LendingClub offers unsecured loans with a minimum credit requirement of 600, making it a good option for those who don’t have good or excellent credit but also want to avoid secured loans. But temper your expectations; a lower credit score likely means qualifying for a lower loan amount and a higher interest rate. The ability to check your rate without a hard credit inquiry makes it easy to shop around for the best rate and lets you check out LendingClub’s options without risk. 

LendingClub makes it easy to use its loans for a variety of purposes, from covering an emergency expense to completing home improvement projects. And if you’re planning to use your personal loan to consolidate debt, the company can save you a step by transferring some or all of your loan money directly to your creditor.

How to Get Approved for a Personal Loan

When you apply for a personal loan the lender will need to look into your financial life. They want to make sure that you’ll pay back the loan.

When you apply, you’ll need to provide information such as:

  • Name
  • Address
  • Date of birth
  • Proof of identity, such as a driver’s license
  • Social Security number
  • Annual income
  • Proof of income, such as bank statements or pay stubs.
  • Verification of employment

While providing all of this information to a lender can be a hassle, it’s worth it.

Companies that don’t request such information tend to charge much higher interest rates because they cannot determine default risk accurately.

They charge higher interest to compensate for the fact that many borrowers may not pay them back.

If a lender has a lot of information about you, the lender can better determine what interest rate to charge you. That usually results in you paying a lower rate.

How It Works for Investors

As a Lending Club investor, you can view Notes, or shares of unfunded loans that can be reserved for possible investment. You can reserve Notes in increments as low as $25. It’s important to note that Notes represent shares in first-issue loans that haven’t yet been funded, not already-funded instruments on a secondary market. Some Lending Club loans don’t receive enough funding to originate. If you reserve Notes in a loan that doesn’t originate, you don’t lose anything – you just get your money back to allocate to Notes in other loans.

Loan Performance

The $25-per-loan investment threshold makes it easier to create a diversified loan portfolio with a relatively modest investment. According to Lending Club’s historical data, investors with diversified loan portfolios (exposure to 100 or more loans and a mix of business and individual loans) can expect to earn annual returns between 4% and 6%. For what it’s worth, these projected returns have declined slightly over time.

As a general rule, annualized default rates vary inversely with loan grade: the higher the loan grade, the lower the default rate. Over time, default rate trends depend on economic conditions, Lending Club’s underwriting standards, and other factors.

These default rates are subject to change over time, and it’s important to note that loans with higher yields come with a greater risk of default compared to loans with lower yields. When you look at an individual loan’s listing, you’ll see its estimated default risk, making your risk calculation that much easier.

While Lending Club stresses that 99.9% of diversified loan portfolios produce positive annual returns on a consistent basis, you do risk loss of principal when investing here due to lack of deposit or investment insurance. These risks may be higher during economic downturns, when default rates are likely to increase. As always, remember that past performance is not predictive of future results.

Manually Selecting Loans and Investing

If you want to evaluate each loan you ultimately invest in, you can manually browse through loan listings. To narrow your choices, filter by such criteria as loan purpose, loan grade, borrower credit score, loan size, time left, rate, and term. When you view an individual loan’s listing, you see detailed information about the loan, including all of the filtering criteria, as well as the monthly payment, funding percentage, and number of investors currently funding.

Listings also contain information about the borrower, including his or her credit score, Lending Club grade, credit history, income, employment status, and homeowner status. And if the borrower chooses, he or she can write a detailed personal statement and loan description. You can’t change settings so that you only view personal or business loan listings at any given time, but each loan’s heading (“Personal” or “Business”) makes it easy to distinguish between the two types.

If a particular loan’s listing meets your investment criteria, you can select how many $25 Notes you want to buy and transfer funds from your Lending Club account. If your loan isn’t funded, you’ll find out within 14 days (or before, depending on when the listing expires). Funds earmarked for loans that don’t originate are returned to your account, where they become available for new investments.

These procedures are subject to change, so be sure to familiarize yourself with Lending Club’s loan origination process before you invest.

Automated Screening and Investing

If you don’t have the time or patience to manually screen loans, Lending Club has an automatic screening and investing tool that allows you to quickly invest in dozens of loans without approving each one.

The process is simple: You set a lower limit on the loan grades you’re willing to accept, and Lending Club uses the cash in your account to make equal-sized investments in each new loan that’s above that limit. For instance, you can choose to only invest in loans graded A and B, or expand to include loans down to F or G, the lowest rating. If you want more control over the process, you can manually set your desired interest rate range, such as 10% to 15%.

Lending Club’s automatic investing tool isn’t instantaneous. The speed at which it invests your account’s cash depends on the availability of loans that meet your criteria and the relative amount of cash in your account. Lending Club prioritizes investments for accounts with more cash, so if you have a small balance, you may find yourself at the end of the line. Likewise, if you have narrow criteria – such as only accepting loans graded A or B – you may have to wait days or even weeks to be fully invested due to a lack of supply of suitable loans.

Receiving Funds

Lending Club investors receive payments at any time of the month, usually within three business days of debiting from the borrower’s bank account. Your payment is proportional to your total stake in the loan, less a 1% annual service charge. In other words, if you invest $500 in a loan with a 10% interest rate, your effective yield is 9% APY, which is $45 annually or $3.75 per month. Prosper and Peerform also take a 1% service charge for each loan issued. You also receive a proportional amount of any late fees charged to a borrower’s account, if they’re ever paid.


To invest with Lending Club, you need to be at least 18 years old, have a valid Social Security number, and meet other financial criteria depending on your state of residence.

Lending Club accepts investments from residents of most states. The exact list varies over time, so check with Lending Club directly for up-to-the-minute information.

Most lenders need to meet strict financial criteria: Either gross annual income of at least $70,000 and a total net worth (not including real estate, home furnishings, and automobiles) of at least $70,000, or a total net worth (with the same restrictions) of at least $250,000. California residents must have gross annual incomes of at least $85,000 and total net worth of at least $85,000, or a total net worth of at least $200,000.

These requirements are waived for California residents who invest less than $2,500 or 10% of their net worth, whichever is less. In fact, regardless of where you live, you can’t invest more than 10% of your net worth at Lending Club.


To apply for a Lending Club investor account, you need to provide your current contact information, Social Security number, and bank account information (for making deposits and withdrawals into and out of your Lending Club account). Lending Club uses the information you provide to verify your identity and bank account, a process that typically takes one to three business days.

Once approved, you need to deposit at least $1,000 to fund your account. The minimum investment per note is $25. You can’t buy Notes unless you have sufficient funds in your Lending Club account. To ensure that’s never a problem, consider setting up automatic deposits from your tied bank account in the amount and frequency of your choosing.


Rebecca is passionate about providing clarity and accessibility to the automotive loans industry as the cost of used cars has skyrocketed due to inflation caused by the COVID-19 pandemic. 

What borrowers are saying about LendingClub

LendingClub borrower reviews are overwhelmingly positive. Customers who have reviewed this company on LendingTree are particularly happy with the responsiveness and customer service. People who have closed a loan through LendingClub noted that the application process was quick and easy.

The only area where borrowers rated LendingClub a little lower is in the fees and closing costs. It’s worthwhile to note that LendingClub does charge an origination fee, while many loan companies do not.

Read all customer reviews

Pros and Cons of LendingClub Personal Loans


  • No application fees prepayment penalty

  • You can check your rate with LendingClub without impacting your credit score

  • Available in every state except Iowa

  • Ranks highly in customer reviews with the Better Business Bureau (BBB)

  • Loans funded within a few days

  • You have the option to add a co-borrower

Cons LendingClub charges origination fees costing 1%-6% of the loan amount Fees for late payments after a 15-day grace period Not available in Iowa or the U.S. territories LendingClub has higher APRs than many competitors Other lenders offer same or next-day funding

Four Steps to Borrowing from Lending Club

For well-qualified borrowers, the process of applying for and receiving a loan is reasonably quick and painless. Here are the four steps you can take to get a loan through Lending Club.

Check Your Rate

The Lending Club website asks you to specify the amount of money you are looking to borrow, the purpose of the loan, and your (self-reported) credit score.

Once you click “Check My Rate,” you are then asked to provide some more information, including your name, birthdate, mailing address, and annual income. (As the website points out on this page, checking the rates available to you will not affect your credit score.)

Once you click the “Get Your Rate” button after providing this information, you are either approved or denied for your loan. If you are denied at this point, it is because your credit score is below the minimum score of 620 or because the amount you want to borrow represents too much debt compared to your income.

If approved, you will see your interest rate and monthly payment for the specific amount you have requested and other loan amounts for which you may have qualified. For instance, if you ask for a $2,500 loan, you may also receive approval for loans that are higher or lower than that amount.

You can compare the loan payment amounts and terms, which will range from 36 to 60 months, to see what will best fit your needs. Once you have selected the loan you want, you will click on the “Get Loan” button to move on to the next step.

Provide Personal Information

To verify your identity, Lending Club needs to know your:

  • Social Security number
  • Employment
  • Housing status

The website secures this page with 128-bit encryption, so it’s safe to provide such personal information.

Once your personal information is verified, you are presented with the loan terms, which you must agree to by e-signing your name to the loan application.

Thus far, all you have done is qualify for the chance to receive a loan.

Verify Your Identity and Banking Information

The final step to receiving your Lending Club loan will require the most legwork. Lending Club asks borrowers who have reached this step to submit paperwork electronically to prove income.

You may be asked to submit anything from tax returns to pay stubs to bank statements. Each borrower is different, so you may be asked to provide any or all of these items. Also, Lending Club will need to verify your bank account, which it will do by making a small trial deposit of less than a dollar into the account.

Once the deposit has been made, you will log back into Lending Club to verify the trial amount on their site. This bank account will be where Lending Club deposits your loan once the funds become available.

Finally, Lending Club may also run a hard credit inquiry on you. While simply checking your rate to get the ball rolling with Lending Club does not affect your credit score, this hard inquiry will lower your score for a few months. If you do take a loan with Lending Club, it’s a good idea to wait at least six months before applying for another loan to let your score recover.

Receive Funding

Most LendingClub members are approved within 24 hours, and you should receive their loans within two days of approval.

LendingClub provides a to-do list so that you can get all the information into their system and be approved as quickly as possible. 

You can have the money deposited directly into your bank account or, if you are taking out the loan to consolidate other debt, you can have LendingClub pay your multiple creditors directly.

Alternative personal loan options

There are plenty of personal loan companies like LendingClub out there, so it’s important to shop around and compare your options before formally applying for a personal loan and committing to a hard credit inquiry. Compare some of your alternative options below:

How LendingClub compares to…
LendingClub Best Egg Happy Money Upstart
Est. APR: 7.04% – 35.89%Loan length: 36 or 60 monthsLoan amount: $1,000 to $40,000

Origination fee: 3.00% – 6.00%

Min. credit score: Not specified

Est. APR: 5.99% – 35.99%Loan length: 36 or 60 monthsLoan amount: $2,000 to $50,000

Origination fee: 0.99% – 5.99%

Min. credit score: 700

Est. APR: 5.99% – 24.99%Loan length: 24 and 60 monthsLoan amount: $5,000 to $40,000

Origination fee: As high as 0.00% – 5.00%

Min. credit score: 640

Est. APR: 4.37% – 35.99%Loan length: 36 or 60 monthsLoan amount: $1,000 to $50,000

Origination fee: 0.00% – 8.00%

Min. credit score: 600

Best Egg vs. LendingClub

Online lending platform Best Egg offers a lower maximum loan amount but has more flexible repayment options than LendingClub. However, Best Egg has LendingClub beat in terms of APRs. Since APR affects the overall cost of borrowing, this means Best Egg’s loans may be cheaper in the long run, depending on the terms you’re offered.

Both Best Egg and LendingClub allow you to check your estimated APR with a soft credit pull, so it doesn’t hurt to shop around with both to see if you can get a lower rate at one or the other.

Read all customer reviews

Happy Money vs. LendingClub

Like Best Egg, Happy Money (formerly Payoff) offers a lower starting APR at just 5.99%. The most qualified borrowers with good to excellent credit scores may qualify for lower APRs at either of these lenders when compared with LendingClub. Remember to account for any origination fees when considering the cost of borrowing.

Happy Money also offers personal loan prequalification without affecting your credit score.

Read all customer reviews

Upstart vs. LendingClub

Upstart is a unique personal loan lender because it takes a comprehensive approach to lending. Instead of relying solely on your credit score, Upstart uses AI technology to consider other factors that contribute to your loan eligibility. This could make Upstart a good choice for borrowers who don’t have a well-established credit history, but do have a higher education degree or steady employment.

Potential APRs are similar to those offered by LendingClub, and you can prequalify to check your rate without affecting your credit score. Upstart also offers next-day funding, so it could potentially be a much faster alternative than LendingClub when it comes to getting the money you need.

Read all customer reviews


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