SoFi Versus Lending Club

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SoFi doesn’t look like a lot of other online loan services, which is good for you. It has higher loan amounts and lower interest rates. It offers cool features and important extras that no other company provides. It has left out important fees that other lenders include, while the fees it does have are lower than most lenders. Sounds perfect, right? Well, perfection comes at a price.

How Does SoFi Work

Even though SoFi doesn’t operate like many other online loan services, it does have a very similar loan process. Basically, you answer a few questions online to get pre-approved. Once you are pre-approved, you choose the loan that works best for you, fill out the application, and once the loan documents arrive, sign them electronically and your account will be funded within a business day.

The tricky part is getting approved. Unlike many new online loan services, SoFi only looks at traditional criteria when reviewing your application, including credit history, steady income and income-to-debt ratio. No student transcripts. No job history. No social networks.

On top of this, you usually need a pretty solid credit score to be approved. Why? SoFi is able to offers such low interest rates and great perks because it only accepts financially stable borrowers. (Note: SoFi does take recent graduates into account who may have little to no credit history. So if your credit score is low because you don’t have enough credit history, you may still be able to be approved.)

If you are able to become a SoFi member, the benefits are definitely worth it. Not only do you get the lower interest rates and fees, but SoFi offers a wide range of resources to help you be successful in your financial life. These can be as simple as its refinancing and home buying guides to its Entrepreneur Program, which allows you to defer your student loans for six months to build a business, in addition to granting you access to investors and mentorship programs.

Is SoFi Legit?

SoFi is definitely legit. It has only been in business for about six years, but already it has the backing of more than $1 billion in funding. It has funded more than $14 billion in loans itself over the past six years to more than 200,000 customers, making it one of the biggest online loan success stories.

SoFi also funds its own loans through its lending arm, SoFi Lending Corp., something that most other online lenders aren’t able to do. It has also had a bond it funded get an Aaa rating by Moody’s Investors Service, which is big for an online lender.

Common SoFi Reviews

SoFi is kind of a juggernaut when it comes to the online loan world, so it is no surprise that it generally tops the leader board when it comes to consumer product review sites. Reviews are generally glowing, with five stars attached to them, boasting SoFi’s low rates, high loan amounts and stream-lined process, although some think it should be more accessible to those with average credit.

The one thing that professional reviewers and users agree on is SoFi’s excellent customer service. Generally, the user reviews discuss the ease of using SoFi’s application system and the friendliness of the customer service, although a few do discuss how much cheaper SoFi’s loan offer was than other banks they had applied to.

There are a few negative reviews from people who were not aware of the process or felt SoFi didn’t handle a mix-up correctly, which are legitimate concerns, but do not speak to the overall competence and function of the company as a whole.

Is SoFi Right For You?

This question is less about whether SoFi is right for you and more about whether you are right for SoFi. Here are a few questions to ask yourself:

  • Do I have good credit?
  • Do I have a steady income?
  • Am I handling my debts well?
  • Did I recently graduate?

If you answered yes to these, you probably have a good shot at being approved for a SoFi loan, and if you can get approved, it’s generally a good idea to go for it.

With SoFi’s low interest rates and fees, it will be hard to find another lender who will be able to beat SoFi’s terms. That coupled with its financial mentoring and other perks make SoFi a no-brainer for those who are looking for a loan.

About the Author

Jeff Hindenach

Jeff Hindenach is the co-founder of Versus Reviews. He graduated from Bowling Green State University with a Bachelor's Degree in Journalism. He has a long history of journalism, with a background writing for newspapers such as the San Jose Mercury News and San Francisco Examiner, as well as writing for The Huffington Post, New York Times, Business Insider, CNBC, Newsday and The Street. He believes in giving readers the tools they need to get out of debt.

Lending Club was once the darling of the online loan world, offering a ground-breaking idea with peer-to-peer lending, where average people could invest in other people’s loans. Since then, several other companies have popped up that utilize the same type of lending, some with new, fresh spins on the practice. This has left Lending Club a little bit behind, however, it is still a great online loan service for those looking for good rates and good service.

How Does Lending Club Work

Lending club is a peer-to-peer lending service, which basically means that ordinary people (who are approved by Lending Club) can invest money to fund your loan. They make money off of the interest you are charged, so it ends up being a win-win.

The first step in getting your loan is filling out an application. Then Lending Club will rank you based on that information so it can determine your interest rate. It also shares that ranking (not your personal information) with its investors when it sends out your loan to be funded. Lending Club will then give you a list of loan offers, and you choose the one that best fits your needs.

Once you’ve selected a loan offer, Lending Club will send the offer details and your ranking to its investors, who can then decide if they want to fully or partially fund your loan. Investors have one to two weeks to decide on funding your loan, so the process can take a while. Once the time is up (or if your loan gets fully funded before the deadline), you will then be presented with the full loan or a partial loan. You then decide to accept or not. If you do, you will see your money deposited in your bank within four business days.

Lending Club offers both three- and five-year loans, and will go over a payment plan with you before you accept the loan.

What Makes Lending Club Stand Out?

The biggest thing is Lending Club’s peer-to-peer lending model. If offers a two-tier business model, in that it can cater to both borrowers and investors. It also keeps Lending Club from having to have a ton of its own cash on hand to fund the loans. It’s also a plus for borrowers because some investors may be more willing to take a risk on people whose credit background is not stellar. If your credit score is not where it needs to be, check out some credit repair reviews to find a credit repair company that works for you. To learn more, check out our reviews of the top credit repair services, Lexington Law compared to Sky Blue.

The other thing that makes Lending Club stand out is its option for partial loans. This is generally something only peer-to-peer lenders do, since there may be more than one investor funding a loan. So, if your loan is 60 percent funded or more, you have the option of taking the partial loan, which is better than just being turned down and ending up with nothing.

Common Lending Club Reviews

Lending Club is pretty well-received in the online loans world, so it’s not much of a surprise that it ranks pretty well among consumer product review sites. For example, NerdWallet gives Lending Club 4.5 out of five stars.

Customers of Lending Club tend to agree. Online customer reviews of Lending Club are generally five stars, with few exceptions. Most of the reviews focus on how quick and easy Lending Club is, since everything is online and accessible with just a click of the mouse. Many customers talked about Lending Club giving them the ability to consolidate their credit card debt, which is a common use of loans from Lending Club.

Negative reviews seem to focus on people who weren’t aware of the origination fee, or felt the interest rates were too high or the process took too long.

Is Lending Club Right For You?

Lending Club does have some unique features that set it apart from other online loan services, which means it can cater to certain needs better than other services. Here are the questions you need to ask yourself when considering Lending Club:

  • Do I need money quickly?
  • Is my credit score not the best?
  • Would I be OK with not getting the full loan?

If you are having a financial emergency and need a loan quickly, Lending Club is probably not the best place to look. Since it is a peer-to-peer lending service, it relies on individual investors to fund each loan. Once you finish your loan application, Lending Club has to send your loan details to all its investors and wait for people to fund your loan, which can take up to a week.

If, however, you can wait and you don’t have the best credit score, Lending Club is a good choice. Since it offers loans to individual investors, it is up to the investors to decide if they want to take a risk on someone with lower credit. There are investors who are willing to take that risk, meaning it might be easier to get a loan through Lending Club than traditional loan services.

Another thing to consider is the fact that Lending Club offers partial loans. If you don’t need the full loan amount, and your credit is not the best, getting approved for a partial loan is better than being turned down altogether. If, however, you have really strong credit, you will probably end up getting approved for the full amount anyway. If you aren’t, you can probably easily get a loan through another online loan service.

About the Author

Jeff Hindenach

Jeff Hindenach is the co-founder of Versus Reviews. He graduated from Bowling Green State University with a Bachelor's Degree in Journalism. He has a long history of journalism, with a background writing for newspapers such as the San Jose Mercury News and San Francisco Examiner, as well as writing for The Huffington Post, New York Times, Business Insider, CNBC, Newsday and The Street. He believes in giving readers the tools they need to get out of debt.