Sofi and Lending Club Personal Loans- Online lending has been on the increase in recent years. Now, people love to apply for loans in the comfort of their homes and some lenders have reached limelight because of their ability to provide this service.
Two very popular companies offering this are sofi and lending club. Both companies offer personal loans to customers who are creditworthy, but is there one of them that is better than the other? It all depends on what you’re looking for.
SoFi and LendingClub: Comparison
SoFi Personal Loans
SoFi, which stands for Social Finance, began as a refinancer of student loans and brought in more products as they grew. They now offer as much as student loans, parent loans, personal loans and even life insurance. In a personal loan, they offer amounts from $5,000 to $100,000, with fast online applications that can be processed anytime. Their customer service is available 7 days a week, and online pre-approval is immediate.
Their preapproval emanates from a soft credit inquiry, which does not affect your credit report or drop your score. This means that you can get pre-qualified and also get an idea on what your interest rate would be, without receiving a hard inquiry show on your credit for the next 2 years.
SoFi’s rates are really competitive, with a fixed rate loans starting at 5.99% APR if you set up AutoPay. Variable loans are even lower, at 5.99%. Those rates come in hand in hand if you’re using the loan to pay off credit card debt, which on average is about 12% APR. Loan terms either can be as short as 2 years, or as long as 7 years, and there are usually no origination or pre-payment fees.
LendingClub also offers personal loans for several reasons, and the online application process is stress-free. After filling out the necessary pre-approval online form, LendingClub will give you some loan options for you to choose from, with a different payment plan and interest rates from their investors.
Because they perform a soft credit inquiry at the start, you won’t see it reflected on your credit report, and it won’t affect your score, even if you’re being declined offer.
Proceeds can be in your bank account in as little as 7 days from the application day, and setting up an automatic payment will give you little discount on your interest rate. Rates might vary widely depending on your creditworthiness, loan term, and other factors; they start at 6.95% but it might be as high as 35.89%.
Personal loans amounts sometimes be as high as $40,000, and loan terms are either 36 or 60 months, so have that in mind when deciding to borrow a larger amount.
SoFi may be a better option if:
Your credit score and income are strong enough to get you the lowest rate
You want no origination or late charges
When you want a large or variable-rate loan
How to qualify: SoFi will require a minimum credit score of 680; and its borrowers generally have credit scores of 700 or higher. The company usually consider income and free cash flow, or how much of your income is left after your expenses.
You can also apply for Personal loans with a co-applicant, which might help you qualify for a loan or get a lower rate. Co-applicants must live at the same location and both applicants are jointly responsible to repay the loan until completion.
Time of funding: SoFi’s loans are usually funded in seven days from the start of the application; co-applications might take a little longer.
Costs: SoFi offers both fixed- and variable-rate loans at a yearly percentage rates that range from about 6% to 18% with an autopay discount of one-quarter of a percentage point.
SoFi has no origination charges, prepayment penalties, late charges or overdraft fees.
Repayment flexibility: SoFi allows borrowers with fixed-rate loans in good standing to change their payment due dates. The company also lets you apply for forbearance (temporary suspension of payments) for three months at a time if you lose your job at no fault of your own. Interest continues to accrue on suspended loans.
Good option for: SoFi loans work best for debt consolidation and funding large one-time expenses, such as home improvements. The lender offers high borrowing amounts, low rates and flexible repayment terms. You’ll need good credit and strong income to qualify.
LendingClub may be a better option if:
If you want a smaller loan
You have an established credit history or record and good credit
When you have a low debt-to-income ratio
How to qualify: LendingClub accepts applicants with lower credit scores than SoFi; its minimum credit score is 600. Applicants must also have at least three years of credit history and a debt-to-income ratio of less than 40% for single applicants.
Like SoFi, LendingClub offers joint applications. One borrower must have a credit score of at least 600, while the other borrower’s credit score can be as low as 540. The combined DTI ratio of both borrowers must be under 35%.
Time to funding: The entire process, from application to loan approval and funding, can take between three and seven days.
Costs: LendingClub’s APR ranges from about 7% to 36%. This includes a one-time origination fee between 1% to 6%, which is deducted from the loan proceeds. LendingClub also charges a late fee if a payment is more than 15 days late.
Direct payment of creditors: For borrowers consolidating debt, LendingClub offers to pay off your creditors directly. You can use up to 80% of your loan amount for this purpose.
Good option for: LendingClub loans work best for debt consolidation, borrowers with good credit and those who want to apply with a joint application. It requires a lower minimum credit score to qualify and looser income requirements than SoFi, but also carries a higher APR range.