Comparing Personal Loans 2024: SoFi Personal Loans vs LendingClub Personal Loans.
We’re going to compare personal loans from SoFi and LendingClub so you can see which one might be better for your situation.
The first thing we are going to look at is the loan amounts that they offer. SoFi doesn’t offer anything less than $5,000 while LendingClub will lend as little as $1,000. So, if you are looking for just a little bit of money to cover an emergency, LendingClub might be the better option.
On the other hand, if you are looking for a substantial amount of money, SoFi might be your better option. They lend up to $100,000 while LendingClub caps out at $40,000. SoFi gets the marks on maximum loan amount.
SoFi’s loans have terms between 2 and 7 years while LendingClub’s terms cap out at 5 years. Seven years is a long time to carry a loan, but if you are borrowing as much as $100,000, you probably need a term that long. Neither one of these companies charge a prepayment penalty, so you should definitely work to pay the loan off early. If you have a longer term, making extra principal payments in the first year of the loan will save you a lot of money on interest over the life of the loan.
Now let’s look at the cost of the two loans. SoFi’s bottom APR rate is 8.99% and LendingClub’s is 8.98%. On a $40,000, 5-year loan, the difference of point-zero-one percent amounts to $11.65 in interest expense. So, it hardly feels like much of an improvement, but better is better, I suppose.
SoFi’s maximum APR is 29.49%, so just under 40%. LendingClub’s maximum tops out at 35.99%. What interest rate each of these companies offers you will depend on your personal financial situation. They will look at things like recent payment history, amount requested, and debt-to-income ratios. So, just because SoFi’s top rate is lower, it doesn’t mean that they would give you the lowest rate. Still, we’re going to give them credit for the lower top rate.
Now let’s look at their origination fees. SoFi doesn’t charge an origination fee. But LendingClub charges an origination fee that can be as low as 3% and as high as 8%. So, is that bad? Well, the origination fee is actually included in the APR. So, if LendingClub and SoFi both offer you a loan with the same APR, but LendingClub’s loan comes with an 8% origination fee, the LendingClub loan doesn’t actually cost you more. In fact, in that case, LendingClub’s interest rate would have to be lower to account for the origination fee. So, do origination fees even matter? Yes, especially if you plan on paying the loan off early. You don’t get a reimbursement on your origination fee if you pay the loan off early. So, if you pay off two loans with the same APR early, the one with the origination fee would cost you more overall. So, SoFi beats LendingClub on this metric.
When it comes to who the two companies approve, you can see that SoFi generally focuses on people with Good to Excellent credit while LendingClub focuses on people with Fair to Good credit. Of course, all you care about is whether they would approve you and which of the companies will give you the best APR. So, no one *wins* this category. It is what it is.
Now let’s compare the personal loan features between the two companies.
The first thing we are going to look at is whether they accept a cosigner. A cosigner is someone attached to the loan who will agree to pay it off if you fail to. So, it can be risky for someone to act as a cosigner. So, what’s the point? Well, if your credit situation isn’t good enough to be approved for the loan you need, a cosigner can help. If that person has a stronger credit history, add them to the loan could make all the difference between being accepted or rejected.
SoFi will accept a cosigner on their loans. LendingClub does not. So, we are going to give SoFi credit for this one.
Both companies will directly payoff your other debts if you use their loan to consolidate other debt. What this means is that if you are consolidating credit card debt with a personal loan from one of these companies, they will take the proceeds and pay off those other debts directly. That means you don’t have to take the money and then pay those debts yourself. That’s really convenient, but there’s another reason I think it’s important. Companies who will do this know that the money they are lending you will be used to pay off other debts and not stack on top of them. By sending the money directly to those other creditors, it also means that they KNOW you will use the money that way. You are more likely to be approved because the new loan isn’t fundamentally changing your debt-to-income ratio.
Next, late fees… SoFi doesn’t charge late fees at all. LendingClub charges either $15 or 5% of the late amount, whichever is higher. This is not a particularly bad late fee. I’ve seen a lot worse, actually. But, something is always worse than nothing when it comes to late fees. So, SoFi gets the win on this category.
Some companies charge other fees as well. Fees like NSF fees, bounced check fees, paper check fees…stuff like that. Neither one of these companies charges any of these other fees.
Okay, let’s summarize how SoFi and Lending Club Personal Loans compare across 11 criteria.
You can see that SoFi fares pretty well compared to LendingClub. They match LendingClub in a few categories like Direct payoff and other fees, and beats them on a lot of other categories.
Of course, for many people, the most important two things are whether they can get the money they need at the lowest possible price. In that case, it’s possible that LendingClub could beat out SoFi in your particular situation. That’s why we always recommend that before you accept a loan, you should shop around. Find the best deal. At The Yukon Project, we’ve tried to make shopping around easy. If you visit our marketplace page, you can directly apply to SoFi or LendingClub—or any one of our other featured lenders. Behind the scenes, we will check your rate with up to 40 other lenders. Our partners use a soft credit check, so applying won’t hurt your credit score. We will show you all of the approved offers so you can pick the loan that’s best for you.
If you do end up with a personal loan from SoFi or LendingClub, come back and leave a comment about how it went. If you found this video useful, please like it and subscribe to our channel. Thanks for watching.
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