How To Consolidate Your Debt With Lending Club

This is a much cheaper, faster, and easier way to consolidate your debt rather than using traditional banks or debt consolidation companies. Lending club makes the process extremely simple and extremely cost effective -Technology is changing everything – even the well-worn process of getting a loan through a bank.

You can now streamline the whole borrowing process and consolidate your debt with Lending Club.

Lending Club is the largest and most well-known of the rising class of direct lending platforms that enable both borrowers and investors to bypass traditional banks.

It just could be the better way to get a loan for millions of people.

How Does Lending Club Work?

Lending Club is a Peer-to-Peer (P2P) lending site that enables investors to invest in the loans of the club’s borrowers. Since this is a form of direct lending between the investor and the borrower, there is no “middleman” skimming profits along the way.

That means that the interest rate charged to borrowers can be lower than what it is for typical credit cards, while investors get higher returns than they can on traditional bank investments.

Loans are risk rated, and assigned interest rates accordingly. The grade is based on credit score, income, employment, length of credit history, debt-to-income ratio (DTI) and other factors.

Lending Club started in 2007, and since that time it has handled more than $20 billion in loans, while paying nearly $600 million in interest to investors. The service has been growing at a rate of over 100% per year for the past several years. The process of P2P lending may eventually become the new normal in personal lending, especially since bank lending policies have become tighter in recent years.

The Lending Club Borrower Advantage

Getting a loan on Lending Club is a simple process:

  1. Customers interested in a loan complete a simple application at LendingClub.com (step-by-step below)
  2. Lending Club evaluates the information (with no impact to the applicant’s credit score), determines an interest rate and instantly presents a variety of offers to qualified borrowers
  3. Investors ranging from individuals to institutions select loans in which to invest and can earn monthly returns

The entire process is online, using technology to lower the cost of credit and pass the savings back in the form of lower rates for borrowers and solid returns for investors.

Lending Club offers borrowers the following advantages:

  • Easy online application
  • Low fixed rates, starting at 5.99% on the best credit grade for personal loans
  • Fixed monthly payments
  • Flexible terms
  • No prepayment penalties
  • No hidden fees
  • Friendly service
  • Personal loans up to $35,000
  • Business loans, up to $300,000 at rates starting as low as 5.90%
  • Home improvement loans

Your privacy is protected – investors and borrowers never know each other’s identities, and the site never sells, rents or distributes your information. The only information that is shared is what’s necessary to complete the requested transactions.

How to consolidate your loan

They really couldn’t make it much easier.  In fact, you can probably do it in a small fraction of the time it would take you to get a traditional debt consolidation loan.  Just follow the 4 steps below to see how to get started.

1. Figure out how much debt you want to consolidate.

Add up all the outstanding debt you have that you want to roll up into the loan.

2. Head over to LendingClub.com

Next, fill in the amount of loan you are going to get, then select “Debt Consolidation”, and then select your credit score.   If you don’t know your credit score, there is an option for ‘not sure’.  Then click “Get Your Quote”

DIY debt consolidation with lending club

3. Get your rate

Now fill out the remaining fields and then click “Get Your Rate” to see what rate they can offer you.

lending club debt consolidation loan application

4. See if you are approved and what rate they offer

Lending club debt consolidation rates

Now you can just click “Get Loan” and you will be off to the races!

get started with your debt consolidation now

A Real-life Example From a Fellow Blogger

Fellow blogger Matt Jabs provides his own Lending Club debt consolidation loan experience on his blog, Debt Free Adventure.

Matt and his wife, Betsy, wanted to consolidate four separate loans into a single debt consolidation loan with Lending Club to lower their interest costs.

Here were the four loans they needed to payoff:

  1. Auto Loan – Capital One @ 10.5%
  2. Credit Card 1 – JP Morgan Chase @ 14%
  3. Credit Card 2 – Capital One @ 16.25%
  4. Credit Card 3 – Citigroup @ 19%

Based on their credit profile, they were able to secure an $11,000 loan from Lending Club to pay off the above debts. They were charged a rate of 9.32%, which was a serious reduction from the high interest credit cards they were paying off. They paid a total of $85 in origination fees to obtain the new loan, but ultimately saved $500 in interest expense for their efforts.

There are success stories like Matt’s all over the web, and on the Lending Club site. A lot of people are finding it faster, easier and more private to get a loan through Lending Club rather than endure the cumbersome and often embarrassing process of going the traditional bank loan route.

Some Caveats on Debt Consolidation Loans In General

Before taking on a debt consolidation loan, make sure that you are aware of a few important realities:

  • Debt consolidation isn’t a get-out-of-jail free card – once you’ve done the consolidation, you still owe the same amount of money that you did before.
  • The loan should either provide you with a lower monthly payment or a quicker payoff of the combination of the loans that you are consolidating.
  • A payment reduction should be used to increase your principal payments, so that you repay the debt consolidation faster than the original term.
  • You should not borrow money from any other sources until the debt consolidation loan is completely paid – otherwise the debt consolidation will become just another loan.
  • The overriding purpose of the debt consolidation should be to get you out of debt – not make your debt easier to live with.

If you keep those realities in mind, then a debt consolidation loan can work for you. And if it will, then Lending Club is an outstanding place to make it happen.

get started with your debt consolidation now

Have you done a debt consolidation with Lending Club?  Would you?

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13 Comments
  1. Joe Tannian

    Please consider attending a Financial Peace class or taking a Crown Financial Ministries class, before you do a debt consolidation. These ministries will help you figure out where your financial problems are and whether debt consolidation is wise.

    • Bob

      Agreed Joe, there are some situations where it may not make sense. If someone has an over-spending habit, a debt consolidation won’t help, it will just amplify the problem. As Kevin mentioned in the article, “The overriding purpose of the debt consolidation should be to get you out of debt – not make your debt easier to live with”

  2. Julie

    I’d love to hear what you think about investing on Lending Club, also.

    • Bob

      Ok Julie, I have toyed with it a little bit and do have some thoughts. Maybe we can write something up for you –

  3. Ivan

    For consumer debts – simple balance transfers at zero % rates for 18 months are better – but before ANY debt consolidation is contemplated a budget is a MUST – PLUS all spending issues MUST be resolved – or the hapless person/family will end up with the consolidation debt plus more new debt and be worse off than ever!!

    • Kevin

      Hi Ivan – The zero interest transfers are a better idea IF you can payoff the credit line before the intro period ends. If you can’t, you will have only transferred the debt from one credit line to another.

      The advantage of Lending Club is that you will have an installment arrangement that will force you to pay off the debt. Zero interest offers are on revolving debt and – well, they don’t call them revolving for nothing!

  4. Loeny

    I have a question, is Lending Club for all types of credit? Or is there a minimum credit score in order to be approved? Thanks for the info!

    • Bob

      Not sure Loeny, I know they have a variety of credit ranges, but you’d have to check with them to be sure.

  5. Tyler

    Good article. I especially like your caveats as I have met too many people who think debt consolidation is the answer to all their debt problems. It usually isn’t. Living on WAY less than you make will have far more benefit than a few points of change on your borrowing rate.

    The example of Matt Jabs saved him $500 but only because his goal was to pay it off in the same time-frame. Others too often consolidate debt to reduce monthly payments, but over longer loan terms. They think they are saving money but that longer term wipes out any realized savings they actually have.

    I agree with some of the other commenters who mention budgets, FP classes, etc… to solve the real issues first. Then you can view ‘debt consolidation’ as a tool in the broader debt fixing toolkit, instead of the only repairman in town.

  6. Jasmin

    Hello Bob, I stumbled across your article “What to do when you hate your job?” just this morning as I was googling lyrics, and I have been in love since that moment. My husband and I are definitely dealing with some debt issues and after coming to your website I saw the ad for Lending Club for the second time. Thank you for the great information about their company. I had never heard of P2P lending and I am definitely interested, but a bit leery. Are there people out there really willing to loan me money? Is the process really that simple? I’m sure I’ll be easy to convince but my husband not so much. Thank you so much for all you do, I am truly inspired. GOD bless!

    • Bob

      Yea Jasmin, it really is a very fast growing industry. The reason that the investors are willing to lend is because their risk is minimized by making small loans. So if you want to borrow $1000 it will likely be funded by 20 or so investors who are only putting up $50 each, therefore greatly minimizing their risk.

      So it really is pretty simple and a pretty cool alternative to traditional banks, IMO…

  7. Nomkers

    My husband and I tried debt consolidation through a nonprofit that haggles with your creditors for lower interest rates and then offers you one low monthly payment based on that. But their “low” monthly payment would’ve been absolutely out of our budget. Is going through Lending Club different?

    • Lauren (SeedTime Editor)

      Yep, I would check out their site and give them a try to see if it’s different for you.

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