What You Need To Know Before Taking A LendingClub Personal Loan and Best Egg Personal Loan.
We’re going to compare personal loans from LendingClub and Best Egg. We’ve spent years working in the lending industry and we track dozens of lenders. We want to break down these two lender 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. LendingClub’s minimum loan amount is $1,000 and Best Egg’s minimum is $2,000. If you need just need a little money to cover a short-term emergency either of these lenders might be a good option. But I will highlight LendingClub because they offer more flexibility on the low end.
If you are looking for a more substantial amount of money, both LendingClub will lend as much as $40,000 and Best Egg will lend as much as $50,000. I will highlight Best Egg because they have the higher top amount.
Loans from LendingClub have terms between 2 and 5 years. Best Egg’s terms range from 3 to 5 years. I am a little concerned about 3 years being the lowest term length. If you’re borrowing less than $3,000, you should try an avoid terms longer than 2 years. That’s just too long to be paying interest for what should be a short-term loan.
Now let’s look the cost of the loans. LendingClub’s minimum APR is 8.98% and Best Egg’s minimum is 8.99%. That 0.01 percentage point is a meaningless difference. For a $10,000 loan with a 4-year term, that amounts to less than $3 in interest expense. If you can get a 9% interest rate right now, you are doing really well. So, I will highlight them both.
Both companies have a maximum APR of 35.99%. There really isn’t anything special about that rate, so I won’t highlight it for either of them.
LendingClub charges an origination fee that will be between 3% and 8%. Best Egg’s origination fee ranges between 0.99% up to 8.99%. A little more than half of the lenders we track charge an origination fee. Any fee over 6% is getting to be on the high side. But, 8 or 9% is not the highest in the industry. So, these numbers aren’t bad, but they also aren’t great. So, I will not highlight either of them. It’s important to keep in mind that the origination fee is a percentage of the borrowed amount and comes out of the proceeds of the loan. So, if you borrow $10,000 and have a 5% origination fee, you will receive $9,500 but will still need to repay the $10,000. Remember that the origination fee is accounted for in the APR. The APR is the origination fee plus the interest rate. All things being equal, you want a lower origination fee if you plan on paying off your loan early. Paying off early will save you on the interest you would have paid, but you don’t get a reimbursement of the origination fee.
Both LendingClub and Best Egg targets borrowers who have fair credit scores. Based on my research, I believe they lend to people with credit scores between 620 and 700. Of course, the lower you go down in their ranges, the less likely you are to be approved. These are guidelines. Lenders don’t usually use credit score to determine eligibility. They will use information like payment history, debt-to-income ratios, utilization, income, and other financial information.
The most common type of borrowing for a personal loan is unsecured. This means that you don’t have to put up any collateral to secure the loan. I like unsecured loans because additional financial setbacks are less likely to create a domino effect on your finances. LendingClub only offers unsecured loans. While unsecured loans are the most common loans that Best Egg offers, they also offer secured loans. A secured loan is one where you put up collateral to guarantee the loan. The most common form of collateral is the title to your motor vehicle. If you have trouble repaying a secured loan, the company can repossess your collateral, in this case your automobile. This can make a bad financial situation worse. But, there are benefits to a secured loan: it’s easier to be approved, get a larger loan amount, or get a lower APR.
I will point out that Best Egg will also allow you to stack multiple Best Egg loans. Of course, we don’t want to get buried in debt, but the ability to stack loans can mean that you can initially borrow the bare minimum of what you need knowing that you can go back if you run into further trouble. So, I am going to highlight Best Egg for having more flexibility in the types of loans they offer.
Neither LendingClub nor Best Egg will accept a cosigner on their loans. A cosigner is someone who agrees to pay off your loan if you fail to repay it. If you struggle to get approved for a loan, a cosigner can strengthen your application. Unfortunately, you would have to find a different lender if you need this option.
If you are using the loan to consolidate credit card balances of other debt, both LendingClub and Best Egg will directly pay off those other creditors with the proceeds of the loan for you. It’s convenient when a lender will do that, but it also shows that the lender knows that the loan will replace other debts and not stack on top of them. Because of that, the new loan won’t change your debt-to-income ratio. That should make it easier to be approved by them. It’s good that they both offer it.
If you are late on a payment, LendingClub will charge you either $15 or 5% of the late amount, whichever is higher. Best Egg will charge you a flat rate of $15. These are pretty standard rates, but I am going to highlight Best Egg because you won’t ever pay more than $15.
So let’s summarize the personal loans offered by LendingClub and Best Egg.
LendingClub and Best Egg are pretty similar in their policies. LendingClub offers a slightly lower minimum loan amount and Best Egg offers a slightly higher maximum loan amount. They have comparable APRs and origination fees. Best Egg does offer more types of loans. They will both directly pay off your creditors if you are using the loan for debt consolidation. And, Best Egg has a better late fee. All in all, I think either of these companies would be a good lender.
But, for many people, the most important thing about a loan is whether you can get the money you need at the lowest possible APR. 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 apply to 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 have any questions about either one of these lenders that we didn’t cover, leave a comment below and we will try and answer it. If you found this video useful, please like it and subscribe to our channel. Thanks for watching.
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