How to get a P2P Loan
When you visit the Lending Club website, and apply for a loan, you are asked a few details such as the amount you require, your reason for acquiring the loan and a credit score estimation.
Next, before they give you a loan rate, Lending Club asks you for personal information, your name, address, income etc.
Lending Club then considers your case and within a few minutes approves it, assigning you an interest rate based on the credit score you have disclosed.
So that even on a low credit score the interest rate is relatively low. And borrowers with very good credit scores have to pay extremely small interests.
Almost 75% of all loans taken from Lending Club are taken to pay off other loans and other high-interest credit card debts.
Peer-to-peer loans are taken at a fixed rate and are repaid before a fixed date. As such, they are non-revolving loans and taking p2p loans does not lower your credit score as much as credit card loans do.
This presents the alternative that you pay off your credit card loan with p2p loans without losing as much credit score.
You can consider the given interest rate and in case it suits your requirements, you can confirm the loan. You must now provide further personal information, such as your contact number, email, employment status and your social security number.
The Lending Club website uses 128-bit encryption which is fairly secure, meaning that the personal information you provide via online forms will not be hacked. Most banks use the same security for their websites.
You are now presented with the Truth in Lending Closure Statement, which details the terms and conditions of this loan. You must click on ‘I agree’ to proceed. Your loan application process is now complete and is ready to be considered by investors. Lending Club forms are the same as traditional loan forms in compliance with extensive state and federal regulations.
The Lending Club Review for Loan Verification Process
Lending Club may verify your work email address to confirm your given source of income. Or it may ask you for original financial documents, such as:
- Tax returns or Tax forms
- Bank statements or pay stubs
- Proof of identity through government IDs
This is a continuous verification process by Lending Club which may not be done on all borrowers, however almost three out of four borrowers are verified. The Club confirms almost 29% of its borrower’s incomes using documents such as W-2s and taxes. On almost 40% of borrowers, they check sources of income by confirming the email address you provided.
Specific reasons may lead to the verification process:
- Irregular information in the application of the borrower
- If the job title and income amount seem to contrast
- If the application seems dishonest
- Randomly selected applications
One does not need to worry about the verification process at Lending Club, since they routinely select random applications for verification. The amount you reported as income can also be off by almost 10% and can still be verified by Lending Club.
The process of application, acceptance, verification and funding can take up to 7 days or longer. And even while your loan application requires verification, it is still posted and can be chosen by investors.
However, even if they choose to fund your loan, the amount will not be transferred to your bank account, until you provide the verification. If you fail to do so, the money will be returned to the investors.
Once the amount is released to your account, within a day, the date is considered your funding date and you need to make your first payment usually after 28 days.
Who Owns the Loan I Receive?
Lending Club acts as the mediator in connecting borrowers with lenders. Investors benefit from providing loans with interests and there is great demand for p2p loans from lenders. This is because the 9% interest rate is relatively more profitable than the 5% or less on other loans or bonds.
Lending Club offers personal loans up to $40,000 at reasonable rates, but its strict credit requirements may put it out of reach for some borrowers. Lending Club is one of the most popular peer-to-peer lenders in the industry. It offers personal loans, business loans and lines of credit, auto refinancing, and patient solutions, which helps cover the cost of pricey medical and dental procedures. Its rates are relatively affordable, especially if your credit is good, and you won’t be charged any prepayment fees if you pay your loan off early. You must have a minimum credit score of 600 to apply, though most borrowers have scores closer to 700. If you don’t meet this requirement, you may want to explore some other options, like Avant or OneMain Financial instead. Lending Club isn’t a good choice if you need money immediately either. Because you have to wait for your loan to be funded by the company’s network of peer lenders, it could take up to two weeks to actually receive your money.