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Personal Loans

LendingClub vs Prosper – 7 Answers for Borrowers

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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LendingClub and Prosper are growing as online personal loan providers, with more and more people shopping for loans with lower rates than their high interest debt, or some spare cash to cover an unexpected situation.

While both are reputable companies backed by management and investors with good credentials, it pains us to see people who shop for a loan and simply chose the very first one that qualifies them. You’re going to want to check rates with LendingClub, Prosper and more.

But before you do, you can read up below on some of the differences between LendingClub and Prosper. While they look the same on the surface, there are actually some big differences to be aware of.

1. Which is more likely to approve you?

The good news is there’s no downside to finding out if both will approve you.

That’s because with an online personal loan you can check the rate you qualify for without a mark on your credit report.

So it’s actually important to check both LendingClub* and Prosper to see who offers the best rate.

And don’t stop there, because several online lenders are fighting for your business and might give you an even lower rate.

We keep a list you can check here. There’s no harm in trying.

2. Which is better for people with less than perfect credit?

Prosper is a stricter lender by a hair, so if they don’t approve you or give you the rate you want, trying Prosper may get you a different answer.

Here’s a comparison of the bare minimum requirements Prosper and LendingClub have for you to be considered for one of their loans:

Minimum credit score

Prosper: 640

LendingClub: 600

LendingClub is a little more lenient here, so if you’re borderline and get rejected by Prosper initially, give them a try.

Even if both accept you, it’s best to check some other online lenders like Sofi.com, Upstart, or Lighstream to see if you can get a better rate. You can check our list of lenders here.

Debt to Income

Prosper: less than 50%

LendingClub: less than 40%

This means Prosper is sometimes willing to take people who have more debt overall than LendingClub, which is something to consider.

Debt to income includes your monthly payments, including mortgage, credit cards, rent, child support, student loans, car payments, divided by your monthly salary.

For example, if you pay $300 a month on your car loan, $550 a month in credit card payments, and $1,100 in house payments, while your monthly salary is $4,000, your debt to income is $1,950 / $4,000 = 48.8%. That would be acceptable to Prosper, but not LendingClub.

Maximum Number of Inquiries

Prosper: 6

LendingClub: 5

Inquiries are the number of times you’ve attempted to borrow money in the past six months, and are reflected on your credit report. Prosper is a little more lenient here.

Minimum Number of Open Accounts

Prosper: 2

LendingClub: 2

Lenders want to see you’ve handled some credit responsibly, so they will want you to have at least two credit accounts open. An account can include a mortgage, auto loan, credit card, student loan, or any other type of credit account on your credit report. Chances are unless you’re very young, you meet this requirement.

3. What information will I need to provide when I apply?

You’ll need to provide basic information like your income, amount of the loan you’re requesting, and employer.

About 80% of the time LendingClub will check with your employer to verify whether you work there or ask for your paystubs to check your income.

When checking your income, they’ll want to see that it’s within 10% of what you stated on your application. So if you said you earn $50,000 a year, and they ask for your last two paychecks they’ll want to see it works out to $45,000 – $55,000 a year in income.

So when you apply don’t put in bonuses, tips, or other income that don’t show on your paystubs if they are more than 10% of your annual income to avoid getting denied by a check.

4. Will I need to tell my life story?

Both Prosper and LendingClub will share your credit profile and loan request with potential people who will fund your loan. But it’s all anonymous and tied to a user ID, rather than your real name.

LendingClub will ask you whether you want to put in some summary information about your loan and yourself, but a lot of people who get approved and funded don’t bother filling it in.

Prosper used to ask you to complete a pretty in-depth profile with a story and picture of yourself, but they’ve moved away from that. So you can stay pretty anonymous when borrowing there as well.

5. How do the rates compare?

Both advertise similar APRs…

LendingClub: 6.95% – 35.89%

Prosper: 6.95% – 35.99%

And the rate you get depends on which of the ‘rating’ bands they assign you.

Those ratings depend on your credit score, total debt amount, the type of debt you have, your payment history, income, and other factors.

In fact, your credit score doesn’t really tell you if you’ll get a decent rate or not.

For example, on LendingClub, of over 700 pending loans on the day we wrote this, here are the interest rates they are charging on loans based on several credit score ranges. (Note this is a little lower than the APR, but it gives you a sense).

Score range: 660-664

Highest: 24.99%

Lowest: 10.15%

Score range: 665-669

Highest: 26.06%

Lowest: 10.99%

Score Range: 670 – 679

Highest: 25.98%

Lowest: 7.69%

Score Range: 680 – 699

Highest: 25.98%

Lowest: 7.12%

Score Range: 700 – 710

Highest: 25.98%

Lowest: 6.49%

As you can see there is a really big range in what they will charge you even with good credit scores.

From 2012 through March 2014, the average LendingClub loan rate was about 14% and the average loan size was around $14,000.

So the short story is – go to both, give them some basic information, and find out where you stand. You might be surprised.

6. What fees do they charge?

While neither charges you anything to check your rate, both charge a fee to complete your loan, and it’s removed from the loan at the beginning.

It works out to 2.41% - 5.00% at Prosper, with the lower fee for people with better credit quality.

APR

6.95%
To
35.99%

Credit Req.

640

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

2.41% - 5.00%

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Prosper is a peer-to-peer lending platform that offers a quick and convenient way to get personal loans with fixed and low interest rates. ... Read More


For example, a three-year $10,000 loan with a Prosper Rating of AA would have an interest rate of 5.31% and a 2.41% origination fee for an annual percentage rate (APR) of 6.95% APR. You would receive $9,759 and make 36 scheduled monthly payments of $301.10. A five-year $10,000 loan with a Prosper Rating of A would have an interest rate of 8.39% and a 5.00% origination fee with a 10.59% APR. You would receive $9,500 and make 60 scheduled monthly payments of $204.64. Origination fees vary between 2.41%-5%. APRs through Prosper range from 6.95% (AA) to 35.99% (HR) for first-time borrowers, with the lowest rates for the most creditworthy borrowers. Eligibility for loans up to $40,000 depends on the information provided by the applicant in the application form. Eligibility is not guaranteed, and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All loans made by WebBank, member FDIC.

And at LendingClub it works out to about 1.00% - 6.00%, also depending on the rating or grade they assign your loan. You’ll know this when you get an upfront rate quote.

APR

6.95%
To
35.89%

Credit Req.

600

Minimum Credit Score

Terms

36 or 60

months

Origination Fee

1.00% - 6.00%

SEE OFFERS Secured

on LendingTree’s secure website

LendingClub is a great tool for borrowers that can offer competitive interest rates and approvals for people with credit scores as low as 600.... Read More

Make sure you ask for a big enough loan to cover this. For example if you ask for a $5,000 loan and there is a 5% origination fee, you’ll get $4,750 sent your way, rather than the full $5,000.

Once you get quotes from both, you can put the upfront fee and the ongoing interest rate into our balance transfer vs. personal loan comparison tool to see which will cost you more or less over the long term. No need to do the math yourself.

7. What if neither of them approve me?

You’re not out of luck.

The good news is: your credit score isn’t penalized by checking rates with LendingClub or Prosper, so you can try another personal loan lender like SoFi to see if you’re approved or can get a better rate.

SoFi
APR

5.99%
To
16.24%

Credit Req.

680

Minimum Credit Score

Terms

24 to 84

months

Origination Fee

No origination fee

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SoFi offers some of the best rates and terms on the market. ... Read More


Fixed rates from 5.990% APR to 16.240% APR (with AutoPay). Variable rates from 5.75% APR to 14.60% APR (with AutoPay). SoFi rate ranges are current as of March 18, 2019 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.75% APR assumes current 1-month LIBOR rate of 2.50% plus 4.28% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

All rates, terms, and figures are subject to change by the lender without notice. For the most up-to-date information, visit the lender's website directly. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.

See Consumer Licenses.

SoFi Personal Loans are not available to residents of MS. Minimum loan requirements might be higher than $5,000 in specific states due to legal requirements. Fixed and variable-rate caps may be lower in some states due to legal requirements and may impact your eligibility to qualify for a SoFi loan.

If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

If your credit isn’t great, OneMain Financial* is a lender that will often approve people with scores below 640, though you’ll need to go in person to one of their own branches to complete a loan application.

And if you apply with OneMain Financial you’ll need to do a full credit pull.

APR

16.05%
To
35.99%

Credit Req.

Varies

Minimum Credit Score

Terms

24 to 60

months

Origination Fee

Varies

SEE OFFERS Secured

on LendingTree’s secure website

Advertiser Disclosure

If you have a credit score below 600, OneMain Financial is one of the few lenders that you can use to get a personal loan.... Read More


Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. The lowest APR shown represents the 10% of loans with the most favorable APR. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes. Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.

Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $7,500. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.

But if your credit is good, check out these other online lenders to see if you have better luck. Some, like Upstart, will take into consideration where you went to school, your Linkedin profile, or even your grades as a way to make you eligible for a lower rate.

APR

7.69%
To
35.99%

Credit Req.

620

Minimum Credit Score

Terms

36 & 60

months

Origination Fee

0.00% - 8.00%

SEE OFFERS Secured

on LendingTree’s secure website

Upstart is an online lender created by ex-Googlers.... Read More

*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.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brian Karimzad
Brian Karimzad |

Brian Karimzad is a writer at MagnifyMoney. You can email Brian at [email protected]

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$

Won’t impact your credit score

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Eliminating Fees

Your neighborhood branch is making $1 million a year in hidden fees

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

fdic-large

Banks make a lot of money from basic checking and savings accounts. It may seem surprising that boring, basic accounts remain such big money-makers for the banks, but banks are making billions every year, largely because we stay with large traditional banks for no apparent reason. Banks call it “inertia,” and they profit from it.

promo-savings-halfOn savings accounts, banks make money by paying depositors virtually no interest. Most major banks pay an interest rate of only 0.01% on their savings accounts. And then they use the money customers deposit to make loans at much higher rates. So, we are basically giving interest-free loans to banks.

There is good news: we no longer have to settle with 0.01%.

Branch-free banks are challenging traditional banks by paying interest rates of 1% or more. That may not seem like a big number, but it can be. If you have a $20,000 savings account, that is the difference between earning $2 or $200 of interest a year. We have compiled a list of the highest interest rate savings accounts, which we update daily. The banks do not pay us, so our recommendations are completely unbiased.

After raking in money on savings accounts, Banks turn their attention to checking accounts. Banks make most of their money by charging the following fees:

  • Overdraft fees: which represent approximately 60% of the fees charged by banks. Only 10% of the population pays 75% of the fees, and they tend to be the most economically vulnerable, including our troops.
  • ATM fees: which can add up quickly. If you go out of network, you pay ATM fees to two banks: your bank, and the bank that owes the ATM
  • Monthly fees: which most people get waived. A direct deposit or minimum balance usually takes care of this fee.

And these numbers add up quickly. We have used FDIC data to see which banks charged the most per branch in fees on checking and savings accounts. Although we expected big numbers, even we were surprised at how much fee income was generated. Bank of America was the worst offender of the big banks, generating nearly $1 million per year per branch in fees. Every time you drive by a Bank of America branch, remember that the bank is earning $1 million in annoying fees alone.

promo-checking-wide-v2

We list the fees per branch below. But, just like with savings accounts, there are new alternatives out there. You can now get a bank account with no monthly fee (and no direct deposit requirement), no ATM fees (including reimbursement of other bank ATM fees) and no overdraft fees. Some of our favorite options include Bank of the Internet and Ally Bank. But you can compare all of the account on our checking account page.

If you are drowning in overdraft fees, or travel and are tired of ATM fees, then switching is a no-brainer. But, you may be thinking that you never pay any fees and don’t really have any problems with your bank. I was in that camp. But then I decided that I didn’t want to stay with an organization that just waits for me to make a mistake, and then charges an outsized fees. Like any other industry, I want to reward better organizations with my business, and I switched to Ally.

Stay Up to Date

price checker thumbnailAt MagnifyMoney, we want people to get in the habit of comparing, ditching and switching. If you find a gas station with cheaper gas, you switch. But, most Americans just stay with their bank. We want people to pay attention to the rate, tricks and traps and be ready to switch when a better deal is out there.

To keep you informed, we created our PriceChecker email, which goes out twice a month. With a quick glance, you can see if you have the best rate on your savings account. We also show the best mortgage rates, credit card deals and cashback rewards. And, whenever we find a fine print trap, we let you know about it. You can sign up for our email list here.

Comparision most fees per branch

#1 on the list is Fort Hood Bank, targeting the people who serve our country in the armed forces.  Their customers will likely have limited assets, and the fee revenue will likely be dominated by overdraft and NSF fees.

#2 on the list is Cole Taylor Bank, which has made news targeting college students on financial aid, who also have limited assets.

#3 on the list is The Northern Trust Company, a private bank.  The average account generated $477 in fees last year. They have 77 offices.

#4 is Bank of America, with 5,319 branches. BofA looks particularly bad when compared to the other big 4 banks:

  • Bank of America charges, by far, the most fees per branch.  23% more than Wells Fargo and 27% more than Chase.

  • Citibank only generates $278,210 per branch, 72% less than Bank of America.  Citi does not have an extended overdraft fee.

At MagnifyMoney, we believe that the overdraft market is ripe for disruption. The revenue generated from the activity bear no relation to the cost of providing the service. My thoughts on how we can make the system better are here.

Follow the latest from MagnifyMoney and send us tips via Twitter, Facebook or Google+.

 

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at [email protected]

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How to Complain

Most Complained About Banks – We crunched the numbers

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Analysis of CFPB DATA

  • Bank of America remains America’s most complained about bank
  • Ocwen has rapidly become America’s most complained about mortgage servicer. (Not surprising, given the mistakes they have made. If you are a customer, you could get money back from them. Find out more here.)
  • Citibank Credit Cards have the highest complaint ratio (complaints as a % of total credit cards)
  • Capital One received the most retail bank complaints per branch (with Bank of America a close second)
  • Experian is the most complained about credit bureau
  • Encore Capital Group is the most complained about debt collector

If you are having a problem with your bank, you can get help with your complaint from the CFPB (Consumer Financial Protection Bureau). Just file your complaint online, and they will help you get answers – and maybe even money. I told the story of my friend, who had his credit history fixed and money reimbursed, in this DailyFinance article. The CFPB has received over 400,000 complaints since it was launched, providing a real alternative for people to get help.

The CFPB makes its complaint database public. To date, over 250,000 complaints have been made public (and more are being added to the database every day). At MagnifyMoney, we believe that public access to complaint data is a great public service. It enables people like us to identify trends, rank banks based upon complaints, and help consumers make good financial decisions.

Today we are pleased to release our analysis of the complaint database.

Over 76,000 complaints were made public during the first six months of the year. Of the big four banks, Bank of America remains the most complained about bank. 5,261 people complained about BofA. Wells Fargo received 4,834 complaints. Chase received 3,988 complaints and Citibank received 3,025.

What does this mean for you?

We have crunched the complaint numbers, and have the following tips:

  1. If Ocwen is your mortgage servicer (now the largest non-bank servicer in the country), you should pay close attention. They have a history of mistakes, which can be very costly. If you are having problems with Ocwen, don’t be shy. Complain to the CFPB, and tell Ocwen that you are going to complain to the CFPB. They are a bit touchy, given they have just been punished with a judgment of more than $2 billion due to their mistakes.

  2. If you are receiving calls from a collection agency, you have rights. And if someone like Encore Capital Group keeps calling you – and you don’t know why – don’t be afraid to raise the issue to the CFPB (and tell Encore that you are doing so).

  3. For choosing a retail bank, we have long argued that branch-free banking is the way to go. Traditional banks pay the lowest rates on savings accounts, charge the highest monthly and overdraft fees, and limit you to their ATM network. Look at our checking account and savings account pages to make your checking account free, earn the highest interest on your savings account, and ditch your traditional bank. Of the big banks, Chase has half as many complaints per branch at BofA. And PNC and US Bancorp always did well.

  4. Credit bureaus can make mistakes. You should check your credit report every year, and make sure that mistakes aren’t there. You are allowed to get a free report every year from all three bureaus, and make sure you do. To get the issue fixed, you can go straight to the bureau. But, if they don’t move quickly enough, use the CFPB.

  5. The biggest complaint categories for credit cards are billing disputes and ID fraud. Sign up for alerts with your credit card company (they can send you an email if a large purchase is made). You should also download your bank’s app so that you can keep an eye on spending. Any suspicious activity should be reported immediately – and you should keep a paper trail of your communication with your bank. The earlier you catch anything suspicious, the better.

At MagnifyMoney, we will continue to update the complaint database, and try to provide you  with useful tips based upon the data.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at [email protected]

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