Obtaining personal loans using conventional means can often be a time-consuming and cumbersome process. If you want to avoid such hassles, this comparative analysis of Upstart and LendingClub can help you choose the right lender based on your loan requirement and preference.

What is Upstart?

Upstart is a lending platform that uses artificial intelligence technology to connect borrowers with lenders. It considers more than 1,500 non-traditional variables in providing loans to potential borrowers with fair or no credit. Loan amounts range from $1,000 to $50,000 depending on the borrower’s application status.

What is LendingClub?

LendingClub is an online digital marketplace offering banking and personal loans to potential borrowers. It works with a network of investors to help borrowers get loans between $1,000 and $40,000 with loan terms of 36 and 60 months. Their less stringent eligibility requirement makes LendingClub suitable for applicants with a fair to good credit history.

What do they both offer?

Potential borrowers looking for lower amounts of personal loans can take loans as low as $1,000 from both Upstart and LendingClub. Approval may vary based on different parameters.

Both offer an Annual Percentage Rate (APR) of up to 35.99% with only a marginal difference between them. Neither offers autopay discount.

There are origination and late fees for borrowers opting for personal loans. There is no prepayment penalty.

Borrowers can expect to receive the loan proceeds as early as the next business day upon successful approval of the application and signing of the loan agreement. Both companies offer loan terms of three years or five years.

What is Upstart’s unique offer?

Hardship Program

Upstart offers a unique Hardship Program that allows borrowers to temporarily suspend their loan payment in case of any economic hardship such as job loss. However, the interest keeps on accruing during the suspension period.

What is LendingClub’s unique offer?

Some of the perks and features of taking loans from LendingClub are:

Flexibility in payment

Borrowers with a good standing current account can change the payment due date either temporarily or permanently. While any permanent change in the due date needs to be done directly from the user account or via telephone, any temporary changes can be made via email or phone at least 3 days before the payment due date.

Additional services

 In addition to providing personal loans to potential borrowers, LendingClub provides auto refinancing and patent financing. Since its acquisition of Radius Bank, LendingClub is now referred to as a digital marketplace bank.

Online management of account

The LendingClub website is optimized for use on mobile phones, making it easier for customers to track their loan details, autopay information, and application status.

Fees compared

Upstart Fees

  • Borrowers are charged a one-time origination fee ranging from 0% to 8% deducted from the loan proceeds.
  • In case of late payment beyond 10 calendar days from the due date, there is a late fee of 5% of the amount due or $15, whichever is higher.
  • For every unsuccessful payment due to insufficient funds or otherwise, there is a penalty of $15.

  • There is no penalty for paying off any installment or the entire loan amount before the due date.
  • Borrowers requesting for physical copies of records and withdrawal of eSign consent need to pay a one-time fee of $10.

LendingClub Fees

  • There is a one-time origination fee which varies from 3% to 6% of the loan amount depending on the credit rating of the borrower.
  • In case of late payment beyond 15 days from the due date, there is a late fee of 5% of the amount due or $15, whichever is higher. 
  • There is no prepayment penalty for paying off the loan amount before the due date.

What are the interest rates?

Upstart interest rates

The APR varies from 5.4% to 35.99%. This is mainly determined by the period of which the loan is taken, and the financial status of the borrower among other factors. Unlike other service providers, Upstart does not offer any discount to borrowers opting for the autopay mode.

LendingClub interest rates

The APR varies from 6.34% to 35.89% while the average APR is somewhere around 15.95%. The applicable rate is determined by a number of factors like debt-to-income ratio, credit history, desired loan amount, among others. However, there is no rate discount for borrowers opting for the autopay mode.

Eligibility compared

Upstart

To be eligible for an Upstart loan, potential borrowers need to meet the following criteria:

  • Must be at least 18 years old
  • Must be a permanent resident or a citizen of the US
  • Should have no bankruptcies or current delinquencies
  • A full-time or a part-time job or a job offer starting in 6 months or any other source of income
  • Must not have more than 5 inquiries during the past 6 months other than mortgages, student loans, or auto loans

LendingClub

Below are the eligibility criteria for applying for a personal loan at the LendingClub platform:

  • Must be a citizen of the US or a permanent resident, or should live in the US on a valid long-term visa
  • Should be at least 18 years old
  • Should have a verifiable bank account
  • Must not be a resident of a US territory

Which has a better reputation?

  • Upstart has an excellent rating of 4.9 out of 5 stars by Trustpilot based on reviews from more than 35,875 customers. The positive reviews are mainly due to the ease of the application process and the credit card consolidation loan. The negative reviews are mainly because of problems associated with bill payments, Covid-19-related assistance, and customer support.

  • LendingClub has a 4.43 star with a B+ rating by the Better Business Bureau. The positive reviews have earned it a 4.8 star on Trustpilot. The easy application process combined with the quick receipt of funds is the main reason for the positive reviews. Some negative reviews are due to the high APR for well-qualified applicants and the slow lending process.

Final thoughts

While Upstart is suitable for lenders with a fair or no credit score, LendingClub is ideal for those who have a fairly good credit score. Borrowers will be able to take personal loans of up to $40,000 at LendingClub compared to $50,000 at Upstart. Both have a good market reputation when it comes to serving customers.

In our opinion, Upstart is suitable for individuals requiring a larger amount of personal loans with fair or no credit while LendingClub is ideal for individuals with good credit scores and looking for loan amounts of up to $40,000.

FAQs

 Are Upstart and LendingClub reliable?

Both have been in business for more than a decade and served billions of customers. The two platforms have obtained good ratings from online customer review platforms and garnered ratings of more than 4 out of 5 from Trustpilot. The ease of the application process and continued customer support service are what make them reliable for personal loan requirements.

Can I change my payment due dates?

Upstart features a unique hardship program that allows borrowers to suspend their loan repayments in case of economic hardships like job loss. The interest keeps accruing on the pending loan amount during the suspension period. LendingClub allows its customers to change their loan repayment date either temporarily or permanently. But any failure to pay installments beyond a stipulated time from the due date without prior intimation will incur a penalty.

Which is better?

The target customers for Upstart and LendingClub are different. While Upstart helps potential borrowers with fair or no credit in obtaining personal loans of up to $50,000, LendingClub helps borrowers with a good credit score in obtaining loans of up to $40,000.

How long does it take to receive the loan proceeds?

While Upstart claims to credit the loan proceeds as soon as the next business day after signing the loan agreement, LendingClub may take up to five business days to provide the loan funds. All depends on furnishing of the proper documents at the time of the loan application.

For what purposes can I use the loan proceeds?

Both Upstart and LendingClub allow their customers to use the loan proceeds for credit card and debt consolidation, wedding loans, home improvements, and medical emergencies. The funds cannot be used for any illegal activity, procurement of illegal drugs, or any investment. Potential borrowers should contact customer support before starting an application.

About the author 

Greg Lorenzo

Greg is a financial expert who has been advising his audience on loans for over 10 years. He has a wealth of knowledge and experience in the area, and he is passionate about helping people get the best possible deal on their loans. Greg is an expert in negotiating loans, and he has a proven track record of getting his clients the best possible terms. He is also a strong advocate for financial literacy, and he regularly gives workshops and seminars on the topic.

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