When it comes to online lending platforms, Upstart and LendingClub battle it out for the top position. This, of course, has left many borrowers with a question at the back of their mind: Upstart Vs LendingClub. Which platform is better on personal loan matters. It can be really confusing since they are all great lending platforms in their own ways.
However, at EBC, we always aim at making your personal financing decisions easier, meaningful, and less strenuous- financially. Today we will focus on the online lending platforms, specifically, Upstart Vs LendingClub.
Here we go!
Upstart was founded in 2012 and has managed to be one of the best lending platforms for personal loans. “It has over 478,000 borrowers with over $6” billion loan originations since its inception. Unlike other lenders that focus too much on one’s creditworthiness, Upstart focuses on their education and employment.
LendingClub, on the other hand, is a peer-to-peer lending platform, a lending model that uses private investors funds instead of banks. Since its inception back in 2008, the company has managed to provide over $22 billion in loans. Lendingclub was also the first peer-to-peer lending organization to register and trade with the Securities and Exchange Commission.
To see which one is better in this Upstart Vs LendingClub conversation, we will compare their different characteristics- in terms of what they have to offer.
1. Annual Percentage Rate (APR)
Upstart looks beyond your credit score, which helps them provide personal loans to people with little or no credit history. They focus on the quality of education that one has, as well as their employment. Their APR ranges between 6.53% to 35.99%*, which is one of the lowest.
LendingClub, on the other hand, looks at your credit score. The higher your credit score the higher the chances you have to get a lower APR. Their APR ranges from 4.99% to 35.96%, where borrowers with a great credit score get 4.99%.
Since Upstart APR can go up to 29.99% while LendingClub’s APR go up to 35.96%, there is a high chance that Upstart is a lot more affordable.
2. Personal Loan Fees
When it comes to origination fees, Upstart will charge 0% – 8% of the amount borrowed whereas LendingClub charges 1% – 6% of the target amount. Origination fee covers the cost of getting into a personal loan agreement with the lender, and also for processing your loan. The good thing though, is that you do not have to cough out this amount from your pocket. It is deducted from the loan.
For late payment, both lenders have a penalty fee of either 5% of your due amount or $15, whichever is greater. They also have no early payoff fee, no direct deposit fee, and have a fixed loan rate.
Upstart charges a $15 fee for failed payments (ACH fail or a returned check). LendingClub charges $15 and has a check processing fee of $7.
3. Credit Score Requirements
The minimum credit score for Upstart is 620, which makes it easy for them to target young professionals and recent graduates. Additionally, you do not need to have years of credit history or open lines of credit. One is also required to be making at least $12,000 per year to qualify for a personal loan.
For LendingClub, their minimum credit score is 600, with the average credit score of their borrowers being 699. You are also required to have at least 3 years of credit history, but the average credit history of their borrowers is 17 years. Additionally, you should not be having any late payments with them for the past 12 months prior to your application.
Both Upstart and LendingClub are Better Business Bureau (BBB) accredited businesses, where LendingClub was accredited in 2008 and Upstart was accredited in 2015. Upstart has a rating of A+ (97 -100 score points), the highest possible grade that one can receive from BBB, whereas LendingClub has a rating on A- (90 – 93.99 score points).
On the Trustpilot reviews, Upstart has a 5 out of 5 stars*, with 650+ reviews. Trustpilot has a TrustScore rating system where customers leave their feedback. Upstart has managed to get a 9.7/10 TrustScore, which ranks amongst the best rates there.
Reputation wise, both companies are great and you cannot go wrong with any of them.
5. Application Process
The application process for both lenders are simple, but the requirements vary. With Upstart, the process is fairly straightforward. In fact, it is one of the simplest loan application processes. All you need to do is include all your relevant information e.g. academic qualifications, work experience, and the purpose of the loan.
They also give you a chance to check your credit score. Once your application is approved, they will send you different terms and options for your personal loan. This will include the APR range, the maximum amount you can borrow, and monthly repayment amount among others.
Once you have done all of the above to your satisfaction and submitted the request, sit down and relax. The funds will be received in as fast as one day*.
With LendingClub, you will enter the amount of money you want to borrow first, and the purpose of this loan to check your credit score. There are quite a number of options to choose from such as debt consolidation, vacation, home improvement, and business among others.
The next step is inputting your preferences e.g. if you want a cosigner, and other personal information like your date of birth, annual income or if you have another source of income among others.
Once all of this done, and they have approved your application, you will receive the funds in 1-7 business days.
Of the two, Upstart has the shortest funding time. You are more likely to receive your funds in a day with Upstart than with LendingClub.
6. Amount You Can Borrow
7. Loan Term
It is important to know that the shorter the term loan, the more you can save in the long run. With a long-term period, you will be servicing interest rates for a long period and your APR will be higher, which can be pretty expensive.
That said, both of the lending platforms offer borrowers a repayment period of 3-5 years*. It is upon you to choose your repayment period. Just keep in mind what we just said above.
8. Availability in States
Upstart is available to all states apart from West Virginia and Iowa.
LendingClub is also available in all states except for Iowa.
9. Customer Support
Both lenders offer customer support in various ways. Upstart has a help page on their platform where you can either ask a question or enter the topic you are interested in. you also have the option of emailing them in case you need more information. They are also available from calls throughout the week from 6 am – 5 pm PST.
LendingClub has a blog post with numerous articles that you can go through to fish for information. Their support team is also available on call from 6 am to 5 pm PT Monday to Friday, and from 8 am to 5 pm PT on Saturday’s.
It is not hard to see why people get all confused in the Upstart vs. LendingClub debate. Well, apart from thfe similarities that they both share such as fast application process and the same repayment periods, the two have a couple of differences. Upstart, for a start, has a faster funding period compared to LendingClub. It is also a good place for recent graduated and professionals with little or no credit scores. LendingClub is good for people with a great credit score, and APR rates for individuals with a great credit score can be as low as 4.99%.
*Disclosure: To get to know Upstart better, read the guidelines from here.