Tag: LendUp

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Should You Avoid LendUp? A Review of Its Loans

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Updated October 25, 2017
Update: On Sept. 27, 2016, the Consumer Financial Protection Bureau ordered LendUP to pay more than $3.6 million in fines for allegedly misleading customers about its online lending service. Read the full CFPB order here

In a nutshell, the CFPB claims LendUP’s parent company, Flurish, Inc., misleadingly advertised its lowest-priced loans. LendUP advertised its loans as available nationwide, yet the most attractive loans were only available to customers in California, the agency says. 

The CFPB also claims  LendUP failed to accurately market the annual percentage rates offered with its loans and in some cases understated the true APR on its loans. 

What does the CFPB’s order mean for LendUP customers?

The CFPB has ordered the company to pay about $1.83 million in refunds to over 50,000 consumers. Consumers are not required to take any action. The company will contact consumers in the coming months about their refunds, the watchdog says.

In response to the CFPB’s claims posted on its website, LendUP says the transgressions date back to the company’s early days. “When we were a seed-stage startup with limited resources and as few as five employees. In those days we didn’t have a fully built out compliance department. We should have.”

Lendup LendUp is a company offering a better alternative to the typical shady payday loan. Its aim is to disrupt the payday loan system by providing consumers with more affordable loans, more education, and transparency.

This is quite a change from storefront payday lenders, who have confusing policies that often leave customers paying more huge amounts in interest.

LendUp wants to reform the payday loan industry by helping its customers get out of debt and build credit.

However, it could come at a hefty price for consumers. Payday loans are known for outrageous APRs, and while LendUp has more reasonable APRs than typical payday loan companies, it’s still something to be aware of.

Who Should Use LendUp?

Before we get into the details of the loans offered by LendUp, it’s important to address who should avoid its loans and who should consider them.

Payday loans are typically short-term loans to tide you over if you need money in between pay periods. The term can be one week, two weeks, or one month long. That’s a big difference from other personal loans that have terms of 1 to 5 years.

It comes down to your personal situation, and what you’re looking to use the money for.

If you have damaged credit or no credit at all, then payday loans might look like the only solution. LendUp can help you, but it’s important to consider the price.

If you’re simply looking to build credit, there are much better options out there. Taking a payday loan should be one of your last resorts. You can only start to build credit via LendUp when you reach Platinum or Prime status, which requires you to take on multiple loans.

Each time you borrow money from LendUp, you’ll be paying a significant amount in interest. For example, even if you only borrowed $100 for 31 days, you’d still pay $24.40 in interest (287.29% APR), according to their calculator.

For that reason, if you have poor or no credit, it’s better to look into opening a secured credit card, or trying to get approved for a store card. There’s no reason to pay $24 in interest if you don’t have to.

If you have severely damaged credit and are unable to get approved for any other solution, or you’re in dire need of cash to afford necessities like food, then you should consider LendUp over going to a regular payday loan store. LendUp is certainly the better option.

That said, if you’re looking for a long-term loan, or looking for more cash for a big purchase, then LendUp is not the right choice. You should check out the other personal loan lenders we’ve reviewed, such as SoFi*, Payoff*, and Upstart*.

How Does LendUp Work?

LendUp Ladder APRLendUp is a completely new solution to payday loans. It has what it calls the “LendUp ladder,” which is a point-based system. When you show that you’re a reliable customer and can make timely payments, you’re rewarded points, which enable you to climb up the LendUp ladder.

Update: In a consent order issued Sept. 27, 2016 the Consumer Financial Protection Bureau claims LendUP misleadingly advertised its loans as available nationwide. However, the most attractive loans, which customers were told they could earn access to through LendUP’s “Ladder” rewards program, were only available to customers in California. 

You can also earn points by watching LendUp’s educational courses on credit and for taking loans with them.

Climbing up the ladder gives you different statuses. You start at Silver, and from there, you can advance to Gold, Platinum, or Prime status. Each status has better terms, and at Platinum and Prime status, you can report your payments to credit bureaus to build your credit.

LendUp also doesn’t allow rollovers. That means if you’re unable to pay back your loan on time, LendUp will not charge you a fee to extend it, as other payday lenders do.

Instead, it offers free 30-day extensions on loans, so if you’re unable to make a payment, all you have to do is log into your account, and choose the option to extend your loan. LendUp tries to work with its customers as much as possible to ensure they’re getting out of debt, not back into it.

According to its website, LendUp is also the “first and only licensed direct lender with a relationship to the major credit bureaus.” LendUp emphasizes that there’s no middleman involved when customers take a loan, which allows LendUp to maintain its transparency.

LendUp Loan Details

Terms vary based upon the status you have with LendUp and you can get a loan amount of $100 – $1,000 depending on your tier.

Silver starts you off with a minimum loan amount of $100 and a maximum of $250. The terms range from 7 to 31 days. The maximum loan amount offered is $1,000, accessible at Prime.

Screen Shot 2015-03-27 at 5.57.58 PMLendUp provides a helpful calculator on its front page that gives you an idea of what you can expect with different loan amounts and terms.

For example, if you want to borrow $250, the APR range is 209.75% (30 days) to 755.03% (7 days).

According to ResponsibleLending.org, the typical two week payday loan as an annual interest rate ranging from 391% to 521%. LendUp falls within that spectrum.

Unlike payday lenders, LendUp rewards customers for continuing to borrower. LendUp does offer rates as low as 29% to its Prime customers, which is great when comparing against other payday loans. However, we’d prefer you focus on building your credit score and look to establish a line of credit with a credit union or get a personal loan from lender with better terms.

LendUp payday loans are also currently offered in only the following states: Ohio, New Mexico, Washington, Maine, Oklahoma, Louisiana, Florida, Texas, Wyoming, Alabama, Idaho, Indiana, Illinois, Mississippi, Oregon, Kansas, California, Missouri, Tennessee, and Minnesota.

LendUp is working on increasing its presence throughout the United States, but since its a direct lender, its has to comply with individual state laws and policies.

LendUp Application Process

The application process is fairly straightforward. LendUp says it should take 5 minutes or less to fill out the application and you’ll get an instant decision.

LendUp offers standard next day funding, instant funding, and same-day funding (Wells Fargo customers only). It warns that if you take instant or same-day funding, you’ll have to pay a fee to cover the cost.

LendUp offers a no credit check payday loan option. To qualify, you just need an active bank account and proof of income.

It assesses applicants on much more than just their FICO scores, which comes as no surprise. Throughout its site, LendUp makes it clear it wants to lend to those with bad or nonexistent credit. Like other personal loan lenders, LendUp uses its own algorithm consisting of different data points to determine whether or not to extend a loan to an applicant.

The Fine Print

LendUp states it doesn’t have any hidden fees, but as with any payday loan, you need to read the fine print.

First, fees and rates are dependent upon the state you live in, so make sure to review state specific information here.

The only fee that’s mentioned with a dollar value attached is a non-sufficient funds fee. LendUp automatically takes money out of your bank account, and if you don’t have enough money in there to cover it, you’ll get hit with this fee, which can be between $15 and $30.

Additionally, if you want to pay before your due date, you can pay with your debit card, but you’ll incur a fee to cover the cost of the transaction.

Opting to get your money instantly or same-day also comes with a fee.

What happens if you can’t afford to pay and you used your extension? This is a common concern among those already tight on money. On its site, LendUp says to contact them at the first sign of trouble. It’s willing to work with borrowers.

However, if you don’t pay, and you don’t contact LendUp, then there are consequences. LendUp can suspend your LendUp account, send your account to outside collection agencies, take legal action, and report your account delinquent to the credit bureaus.

Commendable, but Still a Payday Loan

LendUp’s mission is a commendable one – it wants to educate its customers and provide them with a better way to get back on their feet. LendUp is certainly an improvement over traditional payday lenders, but at the end of the day, it’s still a payday loan. When taking one, you need to consider the overall costs you might face.

Look into secured lines of credit or store credit cards – don’t look to take a payday loan first. Only take one if you desperately need the cash and you’re in a rough spot. Be aware of exactly what you’re getting yourself into, and make every effort to pay off your loan on time and improve your financial situation.

If you’re interested in looking into a loan with LendUp, use its site map to get specific information related to the state you live in, as loan terms vary depending on state.

*We receive a referral fee if you click on offers with this symbol. This does not impact our rankings or recommendations. You can learn more about how our site is financed here.  

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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LendUp or Elevate: Which is the Better Payday Lender?

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

LendUp or Elevate

While the phrase “payday lenders” typically makes you think of shady shops in strip malls or stand-alone stores plastered with self-advertising, there are several “friendlier” options surfacing online.

LendUp and Elevate are two such lenders attempting to change the payday loan landscape, as well as the lives of its customers. The only question is: which lender is the superior choice?

If you’ve found yourself in a bind and need cash quickly, then read on to see which loan may be right for you.

Setting the Context: Traditional Payday Lenders

Before we compare LendUp and Elevate, it’s helpful to have a context for payday lenders in general.

It’s no secret that payday loans are one of the most expensive loans out there, but if you need money in a pinch, it may be your best bet.

First, traditional payday loans are typically littered with fees and traps. For example, if you can’t afford to pay back your loan within the specified time frame, then you may have the option to roll your balance over.

This means that your original loan balance remains (as you can’t pay it off), and a rollover fee is tacked onto that amount.

Depending on how many times you roll your balance over (some states have restrictions on this), you could be looking at paying back a couple hundred dollars more than you originally anticipated. This is an extremely dangerous trap to get caught in.

LendUp is completely against rollover fees and doesn’t charge for extensions (30-day extensions are available on certain loans). Elevate doesn’t penalize you for paying off your loan early if you’re able to, and it says that it offers a 7-day payment extension on its RISE product if you’re unable to make a payment when it’s due.

Second, traditional payday loans usually have very short terms and offer small loan amounts. You have around 7 to 14 days to pay back your loan. This isn’t always realistic, and you may face those rollover fees if you don’t have the money after your next pay day.

LendUp and Elevate both offer longer repayment terms that give you a little breathing room when it comes to making payments, and RISE (Elevate) offers larger loan amounts. The loans are structured to be more cash flow friendly.

As you can tell, both companies are working toward providing better loans for those with poor credit, especially when compared to traditional payday lenders. Let’s see how they compare against each other.

LendUp: What it Offers and Who Benefits

Update: On Sept. 27, 2016, the Consumer Financial Protection Bureau ordered LendUP to pay more than $3.6 million in fines for allegedly misleading customers about its online lending service. Read the full CFPB order here

In a nutshell, the CFPB claims LendUP’s parent company, Flurish, Inc., misleadingly advertised its lowest-priced loans. LendUP advertised its loans as available nationwide, yet the most attractive loans were only available to customers in California, the agency says. 

The CFPB also claims  LendUP failed to accurately market the annual percentage rates offered with its loans and in some cases understated the true APR on its loans. 

What does the CFPB’s order mean for LendUP customers?

The CFPB has ordered the company to pay about $1.83 million in refunds to over 50,000 consumers. Consumers are not required to take any action. The company will contact consumers in the coming months about their refunds, the watchdog says.

In response to the CFPB’s claims posted on its website, LendUP says the transgressions date back to the company’s early days. “When we were a seed-stage startup with limited resources and as few as five employees. In those days we didn’t have a fully built out compliance department. We should have.”

Lendup
LendUp says its “mission is to expand access to credit and lower the cost of borrowing for the millions of Americans that traditional banks are typically unable to serve.”

How does it accomplish that? It offers terms of 7 to 30 days, with loan amounts of $100 to $250 available. APRs range from 206.83% to 773.80%, depending on the terms you’re approved for, and the state you reside in.

For existing customers, long-term installment loans of up to $1,000 are available with APRs as low as 29.99% and repayment terms as long as 12 months. As of April 2016, LendUp is working on making long-term loans available to new customers as well.

LendUp is available in the following states: Alabama, California, Florida, Hawaii, Idaho, Illinois, Indiana, Kansas, Louisiana, Maine, Minnesota, Mississippi, Missouri, New Mexico, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Utah, Washington, Wisconsin, and Wyoming.

LendUp is unique in that it “gamifies” your payback experience. As you take financial literacy courses, make timely payments, or take out (and pay back) additional loans, you “move up” on its LendUp Ladder. There are four tiers: Silver, Gold, Platinum, and Prime. At the Platinum and Prime tiers, you’re able to report your payments to credit bureaus to rebuild your credit.

LendUp’s APRs rival those of traditional payday lenders initially, but if you ever need to borrow more money, your rate will decrease (as long as you maintain a good track record). LendUp wants to provide its customers with a better financial future, whereas regular payday lenders only focus on making sure they get paid on time.

Additionally, LendUp is a direct lender, which means any loan you take from LendUp is owned and issued by LendUp. There are no third-parties involved in the transaction.

Elevate: What it Offers and Who Benefits:

Elevate
Elevate offers two different financial products: RISE and Elastic.

RISE is Elevate’s unsecured installment loan – its answer to traditional payday loans. You’ll have a set payment schedule, and similar to LendUp, future loans you take out with RISE are eligible for lower APRs.

Rise
To start, RISE has APRs ranging from 36% to 365%, with loan amounts ranging from a few hundred to $5,000, and repayment terms from as little as a few months to 26 months. The reason for the disparity is because all terms vary depending on the state you reside in.

RISE is only available in Alabama, California, Delaware, Georgia, Idaho, Illinois, Missouri, New Mexico, North Dakota, Ohio, South Carolina, South Dakota, Texas, Utah, and Wisconsin.

You should be aware that even though RISE is available in these states, it is not the lender in all cases. When it’s not, it charges an extremely high fee to find a lender that will extend credit to you. For example, in Ohio, it charges a $1,018 “CSO” fee on a $1,000 loan.

Again, this isn’t the case in all states (a loan in Missouri doesn’t have a CSO fee), but it’s something you should watch out for as those fees will likely make the loan not worth your time.

Elastic
Elastic differs from RISE in that it’s a bank issued line of credit, which means you can pull funds from it when you need to. You pay for this convenience in the form of a 5% cash advance fee, though.

The credit line is between $500 and $3,500, and your payment schedule is adjusted to match your pay cycle. So if you’re paid bi-weekly, you’ll be required to make a payment every two weeks, and if you get paid monthly, you’ll make a payment one every month.

Elastic requires you to pay off your balance within one billing cycle, otherwise you’ll be subject to a minimum charge. This fee ranges from $1 to $100 for non-monthly customers, and $2 to $200 for monthly customers, depending on your balance. You can view examples on its website here.

Elastic is available in the following states: Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Washington DC, Wisconsin, and Wyoming.

As mentioned, Elevate is typically the direct lender on RISE loans, but not all. Republic Bank & Trust Company is the bank that issues the line of credit for Elastic.

Pros and Cons

Let’s review the pros and cons of each lender to see how the competition stacks up.

LendUp

Pros:

  • LendUp is currently available in 23 states, which puts it slightly above RISE.
  • In many cases, you can extend your loan term up to 30 days from your loan origination date for absolutely no fee, although interest will continue to accrue.
  • LendUp is willing to work with borrowers who are unable to pay on time. In multiple places on its site, it says to call if you don’t think you’ll be able to make a payment. It is also very transparent about being an expensive choice for a loan.
  • The LendUp Ladder can be motivating for some individuals, and it’s an experience that neither RISE nor Elastic offer.
  • As an existing customer, you have access to better long-term installment loans as you move up the Ladder.

Cons:

  • The full LendUp Ladder isn’t available in all states, which means credit reporting isn’t an option for all customers. If you want to rebuild your credit, and the LendUp Ladder isn’t available, you might want to consider another lender that will report your timely payments to the credit bureaus. However, LendUp does mention that it isn’t the best option to use to solely rebuild your credit as it’s fairly expensive.
  • LendUp offers short-term loans with lower amounts, so if you’re looking for more than $250, you’re not going to find it here.
  • The APRs on short-term loans are on the higher end to start. Even though your APR will decrease the more you borrow with LendUp, that could encourage people to borrow more often when they shouldn’t rely on loans. This is both a pro and a con, as existing customers who truly need cash will at least pay less the next time around.

Elevate – RISE

Pros:

  • RISE has longer repayment terms and offers larger loan amounts, meaning you have greater flexibility when borrowing funds.
  • Compared to LendUp, RISE’s APRs are slightly lower.
  • If you no longer need the loan, you have the option to reject it for up to 5 business days after you sign the loan agreement. You’ll only have to repay the principal amount you borrowed – no interest or fees.

Cons:

  • RISE is only available in 15 states. The limited availability is a huge drawback, along with the fact that it doesn’t directly offer loans in all of those states.
  • The CSO fee it charges in certain states is hefty.
  • Similar to LendUp, RISE will offer lower APRs to returning customers based on prior payment history. This is both good and bad for the aforementioned reasons.
  • While RISE has lower APRs, the repayment term is typically longer, and on a higher balance, the interest you accrue might end up being just as expensive as a loan from LendUp.

Elevate – Elastic

Pros:

  • Elastic is a convenient and quick option for those who need funds on a continuous basis, as once you’re approved for a line of credit, you can request more funds as you go (provided you continue to make the required payments).
  • The way payments are structured encourages borrowers to pay their loan back on time when they receive their paychecks from work.
  • Elastic is available in more states than LendUp and RISE, making it a viable option for more people.
  • Repayment typically takes around 10 months, making Elastic a decent middle ground between LendUp and RISE.

Cons:

  • The 5% cash advance fee is rather high. Most cash advances on credit cards are around 3%.
  • The repayment terms are slightly difficult to understand. There’s a lot of fine print where the “minimum charge” is concerned.
  • This is both a pro and a con, but if you maintain a balance on your account for 10 consecutive months, you’ll be subject to a “cooling off” period where you will not have access to additional funds.

Other Payday Lender Alternatives

If neither LendUp nor Elevate work in your favor, or if they’re not available in your state, then check out these payday lender alternatives if you’re in a tight spot with money.

Avant

Is your FICO score between 600 and 700, but traditional banks still aren’t willing to lend to you? You may have better luck with Avant. There are no origination fees, and your payments are reported to the credit bureaus.

The vast majority of the loans Avant offers are for $2,000 to $35,000, with APRs ranging from 9.95% to 36%. Repayment terms range from 2 to 5 years. However, Avant’s loans are made by WebBank and affiliates of Avant – not Avant directly. It doesn’t offer loans in Colorado, Iowa, West Virginia, and Vermont.

This is a great option for those with the credit to get approved, as the APRs are much lower than Elevate and LendUp, there are no hidden fees to be concerned about, and it’s available in more states. Avant is an alternative that’s closer to a personal loan than a payday loan, but made for those with lower credit.

Credit Card Cash Advance

As stated before, at least when compared with Elastic, a credit card cash advance may be somewhat cheaper, but it’s still a costly option compared to Avant (or obtaining a personal loan, if your credit is good enough).

If you have a credit card that has a flat fee for a cash advance as opposed to a percentage of the advance amount, this can be the lesser of the “payday lender evils” to go with.

For example, some credit cards charge $3 regardless of the cash advance amount you take out, whereas others charge a 3-5% fee. There are also a few credit cards that do not have any cash advance fees at all. For a list of recommended credit cards for cash advances, check here.

Credit card cash advances are not a good idea for those who currently don’t have a credit card, or those who simply can’t trust themselves when spending with plastic. If you’re in need of a payday loan, you’re not in a stable enough financial situation to risk taking on more debt – especially consumer debt.

Additionally, your credit will be checked when you apply for a new credit card; with some online lenders, you can get preapproved for a loan and see the rates you qualify for with a soft credit inquiry.

Personal Loans from Online Lenders

Speaking of, there are a few other online personal loan lenders similar to Avant that may be willing to lend to you for less than Elevate and LendUp. Quite a few don’t require hard credit inquiries, making them decent options to look into.

Plug your information in here and do a quick comparison of the personal loans that may be available to you. If you need cash quickly, there are some lenders that can have the funds to you within the next business day or two.

Which Payday Lender Will Work For You?

LendUp and Elevate’s RISE and Elastic all serve different purposes, so which one is better for you greatly depends on your circumstance.

The closest thing to a normal payday loan is LendUp because of its small loan amount and quick repayment term. It’s a much better alternative because there are no rollover fees, and LendUp seems willing to work with borrowers unable to pay back the amount they owe. Beware of the high APRs and make sure you know exactly how much the loan is going to cost you upfront.

RISE is closer to a personal loan than a payday loan due to its longer repayment term and larger loan amount. However, since you can borrow a few hundred dollars at a higher APR, it provides flexibility that LendUp doesn’t.

Elastic might be the most convenient choice, as it’s a line of credit option (and the others are installment loans), but it could also be the most expensive with the 5% cash advance fee and minimum charge that gets tacked onto your payment. Since it is a line of credit, that could easily influence you to keep borrowing, and you shouldn’t think of any of these loans as a permanent solution to your financial problems.

Regardless of which choice you go with, be aware of how costly these loans are and what the consequences are if you can’t pay. Just because LendUp allows a 30-day extension, and RISE offers a 7-day extension, doesn’t mean you should rely on it. You want to be the best borrower possible to improve your chances of getting a regular loan in the future, should you need one.

Lastly, don’t be afraid to do the math to see which option is better for you. You may get approved for different rates at different lenders, or a cash advance from an existing credit card you have may turn out to be a better option. While you may not have the luxury of time right now, it’s worth thinking about for the future.

Whatever option you decide to go with, read the fine print, understand the loan in its entirety, and stay away from traditional payday lenders on the street corner. They’re certainly not worth your time (or money).

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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Avant vs LendUp: Which Loan Should You Choose?

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Screen Shot 2014-11-25 at 3.35.54 PM

Avant and LendUp are two companies aimed at helping consumers gain access to credit. Each company wants to improve the online lending industry in a way that helps customers. They both offer a simple application process to make it easier for borrowers to get the money they need, and they’re both transparent about the process.

However, they’re structured very differently. Avant* offers access to personal loans in the form of actual installment loans, whereas LendUp offers a slightly better version of a predatory payday loan.

Avant is trying to bridge the gap between consumers needing to resort to payday loans because they lack the credit to qualify for a personal loan. In Avant’s own words, its personal loans are for “when you need a repayment option that extends beyond your next payday.”

Let’s take a look at the similarities and differences between the two, and which one might be right for you.

Avant and LendUp Are Filling a Void

Both Avant and LendUp are offering alternatives to borrowers in each provider’s respective industries – personal loans and payday loans.

LendUp does this by offering its loans to those with damaged or nonexistent credit. It also provides educational incentives for consumers to get better terms on their loans with their “LendUp Ladder” program.

Customers can earn points by watching educational videos on credit, and these points advance them up the ladder to different statuses. Each status offers access to more money at lower rates, and for longer periods of time.

The Avant platform similarly loans to people with lower credit scores. Neither company focuses solely on your credit score – instead, each takes into account your financial situation, your income, your employment history, and your loan repayment history.

If you don’t have the best credit score, which lending option should you choose? With very few exceptions, you should always apply through Avant first as it offers the better deal. If you’re declined through Avant, you can turn to LendUp.

The Biggest Difference is the Terms Offered

Because LendUp is a payday loan alternative, its terms are extremely short – from 7 days to 31 days. Avant offers much longer terms – up to 60 months.

Additionally, since LendUp is focused on shorter loan terms, it also has lower loan amounts – from $250 to $1,000. Avant offers access to loans from $2,000 to $35,000 (with the minimum varying from state to state).

Screen Shot 2015-03-31 at 2.39.11 PMThe biggest difference? The APR. LendUp’s APRs range wildly depending on how long your loan is and how much you borrow – anywhere between 291% to 1147%! Avant offers APRs much less than that, with a range of 9.95% – 35.99%.

A loan through Avant might look like this: a $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33.

An example loan from LendUp: a $200 loan with a term of 14 days, costing you $30.10 in interest – that’s an APR of 392.38%. (As of March 31, 2015)

If you’re looking for a small amount of cash to tide you over until your next paycheck, it makes sense to choose LendUp. If you’re looking for a much longer term, or for more money, then choose Avant. But carefully consider the fine print and interest rates before going with either lending option.

Don’t Use Either One For the Sole Purpose of Building Credit

As helpful as Avant and LendUp may be, they’re not your only options if you need to build credit, nor are they the best options out there.

From the example shown above, it’s clear that borrowing from LendUp comes with an additional cost due to the interest charged on the loan. Building credit and having to pay that interest isn’t worth it. Likewise, Avant doesn’t have the best interest rates out there for personal loans.

If you need to build your credit, you should look to opening a secured credit card instead. If you can qualify, store credit cards work as well. You want to make on small purchase a month and pay it off on time and in full to start with so you can prove you’re a responsible consumer.

By opening a credit card, you can pay on time and pay in full, and never have to pay interest.

When you take a loan, you’re going to be paying a decent amount in interest, which causes you to pay much more than the original loan amount you took out.

Is building your credit worth that cost? Not if you can get approved for a different solution.

You should only be taking these loans if you truly need the money. Don’t take them for the sake of building your credit unless you’ve exhausted all your other options.

The Fine Print

Make sure to read the fine print when it comes to hidden fees.

Depending on the state, Avant may charge a late fee of $25 when payments are past due for 10 days, and a dishonored payment fee of $15 if your money is returned unpaid. Both offer the option to enroll in automatic payments.

Depending on the state, LendUp charges between $15 and $30 for a returned payment.

Note that both lending options strongly encourage borrowers to call if they’re experiencing difficulty making a payment. Both lending platforms are willing to work with customers. Avant states it can offer a courtesy due date adjustment if needed, and it also has a Payment Planning Team dedicated to working with borrowers.

What about other fees? There are no prepayment fees with Avant. However, Avant does charge an origination fee. LendUp doesn’t charge an application fee either, but if you want to pay your loan before the due date, you’ll face extra charges to cover the cost of the transaction from using your debit card.

The Application Process

LendUp and Avant have simple online applications. You don’t have to worry about going through a mountain of paperwork like you would if you were applying for a traditional loan with a bank.

LendUp’s application process might be a bit quicker overall, because it offers instant and same-day funding options for borrowers (though same-day is only available to those with Wells Fargo bank accounts). Avant simply offers next business day funding if you’ve been approved by 4:30 central time, Monday through Friday.

Avant states that most of its customers have credit scores ranging from 600 to 750, so if you fall somewhere between that range, you have a better chance of being approved.

Of course, your credit score isn’t the sole determining factor for either of these companies. They’re looking to see whether or not you have the ability to pay based on your current financial situation.

As far as credit checks go, only conducts a soft inquiry on your credit report when you check your Loan Options.

LendUp offers a no credit check option for its payday loans. You’re eligible if you have an active bank account and can provide proof of income.

One big thing to note is that LendUp is currently only offered in select states (Ohio, New Mexico, Washington, Maine, Oklahoma, Louisiana, Florida, Texas, Wyoming, Alabama, Idaho, Indiana, Illinois, Mississippi, Oregon, Kansas, California, Missouri, Tennessee, and Minnesota), whereas Avant has a much wider offering. Avant is available in all states except Colorado, Iowa, West Virginia and Vermont.

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Which Lending Option is Better?

Considering they’re both used for different purposes, we can’t say definitively which is better for you. It depends on your financial needs.

promo-personalloan-halfIf you’re struggling to afford your bills or any other immediate needs, you might want to consider getting a loan from LendUp, if you can pay it off on time. LendUp does not allow rollovers at the end of your loan-term, which is a common debt trap with traditional payday lenders.

If you have loftier financial goals, such as wanting to make improvements around your home, needing help financing a car, or wanting extra breathing room in your wedding budget, then personal loans are the way to go. If you have better credit, we encourage you to look at the other personal loan lenders we’ve reviewed, as many of them offer better interest rates than Avant.

Always remember to shop around and see which lenders can offer you better rates. Many personal loan lenders only do soft inquires which won’t impact your credit score. If you shop around within a 30-day window, you’re inquiries will be grouped together, making less of an impact on your score.

How to Make Your Decision

If your main goal is to improve your credit score, try and get approved for a secured credit card instead. You won’t be stuck paying interest, and you’ll still reap the same credit-building rewards. If you’re hard-pressed for cash and don’t need a huge amount, then LendUp is a better solution than a typical payday loan lender. If you need more than a few hundred dollars to fund your goals, but don’t have the best credit, then consider applying for a personal loan through Avant.

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Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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