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Get a Peer to Peer Loan with Lending Club

May 2nd, 2009 | Posted in Loans

Getting a peer to peer loan is a novel way to borrow money, especially considering that fact that banks have been pretty tightfisted with their money lately (excuse me, I mean “YOUR money lately”). While I don’t recommend immersing yourself in debt, there are legitimate reasons for needing a loan – debt consolidation, student loans, business ventures, etc. So, if you’ve got good reasons and are having trouble getting a loan then consider peer to peer lending. It is increasingly viewed as a godsend by those who really need a low interest loan for legitimate reasons. People are embracing the idea of borrowing money from ordinary people that are just like themselves. And what’s more, there are plenty of people ready and willing to lend their money. With equity markets in turmoil, more and more investors are turning to peer to peer lending as an alternative investment avenue and since everyone hates banks, it’s a win win situation! So, because person to person lending cuts out the middleman (the bank), two things happen: interest rates for the creditworthy borrower are lowered and the likelihood of getting accepted for a loan is raised. When the lenders are regular people just like you, they are much more likely to be sympathetic to your plight.

I’m going to cover the basics of getting a peer loan from the Lending Club network here.

Criteria for qualifying as a Lending Club borrower

Lending Club’s rules for getting a loan are also simple and straightforward, but fairly strict. Here are their requirements:

Loan Terms: Loans amounts range from $1,000 to $25,000 for a three year term, are unsecured, and are at a fixed rate.

Eligibility: Lending Club only allows prime borrowers. This means that you’ll need a FICO score of at least 660 and a debt to income ratio of lower than 25% (excepting a mortgage). Borrowers are also required to be a US citizen or permanent resident, at least 18 years old, and to have a bank account & social security number. Residents from Idaho, Indiana, Iowa, Maine, Nebraska, North Carolina, North Dakota, or Tennessee aren’t accepted as borrowers.

Fees and Expenses: Borrowers pay an upfront fee based upon a percentage of the loan amount. These range from 0.75% to 3.50% based on your credit rating. These fees are amortized into the loan.

How the Lending Club loan process works

The borrowing process on Lending Club is very simple and straightforward. You simply visit their website, sign up for an account, and then submit a free application by clicking the Borrow tab.

The following loan application process consists of 8 easy steps, in which you’ll be asked basic information along with the amount of money and the purpose of the loan. When you define you reasons for a loan be sure to write a decent description as this, along with your credit history, is what will convince the lenders to lend you money. Don’t worry, you’ll see hints and advice throughout the application process that will help you formulate a good quality request.

After this you’ll reach the Loan Terms stage. Here you will see the loan options that you qualify for. These are based on your credit rating and debt to income ratio. After you select one you are presented with the Truth in Lending Disclosure – read it carefully. Next you will enter your bank account information, which will be used for depositing the loan into your bank and for withdrawing your monthly payments. An automatic bank draft is the only option allowed for your monthly loan repayments – this is one of the things that gives lenders an extra sense of security and makes them more inclined to lend you their money.

After that you will set up your affiliations, which basically describes your location, employment, education, and lifestyle interests. This is one of the things that accentuate the truly social aspect of peer to peer lending. Don’t skimp on this step, the more things in common you have with lenders the more inclined they are to lend to you. In the final step you’ll confirm all the previous details and get an explanation about how the loan request will be listed and funded.

Once you agree to everything you can then sit back and wait for lenders to review your request and fund the loan, which can take up to 14 days – the higher the loan amount the longer it will take to fund.

Funny Lending Club Video

Pretty simple stuff. Give peer to peer loans some consideration if you don’t like the idea of going hat in hand to a banker.

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