LendingClub vs. Discover: Which Personal Loan Is Right for You?
Updated: July 25, 2023
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If you need a personal loan quickly, LendingClub and Discover are excellent choices; nevertheless, the ideal option will depend on your requirements and personal situation. LendingClub is perhaps the best option for those with fair or average credit, even though both lenders provide quick response times following application. Discover may be a fantastic option for those with good credit.
You can compare lenders and choose the best choice for your requirements with the aid of MoneyGeek's comprehensive and current information on well-known personal loan lenders in the U.S.
LendingClub or Discover: Overview
To help you decide between a loan from LendingClub and a loan from Discover, MoneyGeek compared the lenders for interest rate range, minimum credit score requirements, loan amount range, repayment terms and fund disbursement time.
LendingClub and Discover offer maximum loan amounts of $40,000 and $35,000, respectively. However, at 720, Discover has a higher minimum credit score requirement for approval than LendingClub. LendingClub may be the best option if you have good credit and need a personal loan with a higher maximum loan amount.
LendingClub
Discover
APR Range
LendingClub provides personal loans with APRs ranging from 7.04% to 35.89%. Discover offers APRs ranging from 5.99% to 24.99%, depending on creditworthiness.
The APR, or annual percentage rate, is the yearly interest rate that a borrower must pay back on a personal loan. Your credit history and risk profile heavily influence the APR on your loan. APR ranges might also vary significantly among lenders.
Although obtaining the lowest possible interest rate is excellent, APR is just one factor to consider when selecting a personal loan provider.
In this comparison, Discover is the winner because it provides APRs as low as 5.99%, depending on the borrower's creditworthiness. Individuals with excellent credit will likely benefit the most from Discover's low APR. Those with stellar credit histories will get the most out of the lender’s low APR.
Remember that the overall cost of a loan is significantly impacted by its APR. A loan with a lower APR will accrue less interest and fees. A lower APR is preferred over a higher one because it lowers the total cost of the loan. Because of this, it's prudent to shop around and compare rates and terms from many lenders before choosing one.
Minimum Credit Score
Borrowers with fair-to-good credit are eligible for a LendingClub loan. Unlike Discover, which requires a minimum credit score of 720, LendingClub only requires a credit score of 600 to be eligible for a personal loan.
Lenders use your credit score to assess your loan eligibility and terms. Based on this score, your APR, as well as your repayment terms, may be selected.
It’s important to note that factors like your credit and payment history, current debts, types of credit accounts and new credit account applications may impact your credit score.
In terms of credit score, LendingClub is accessible to more borrowers, as the lender has a lower minimum credit score requirement. However, those with lower credit scores will receive rates on the higher end of the range.
Loan Amount Range
The personal loan amount range is the amount of money a lender is willing to lend to a borrower. Personal loans from LendingClub are available between $1,000 and $40,000, while those from Discover range from $2,500 to $35,000.
Many factors, including your creditworthiness, the loan's repayment term, the loan's purpose and the lender's terms and conditions, will impact the amount you’re allowed to borrow. Because of this, you should look for a flexible lender to modify the terms of your loan to meet your requirements.
LendingClub provides a wider loan amount range than Discover, with personal loans ranging from $1,000 to $40,000. However, whether or not this will work for you depends on your requirements.
The loan amount is just one of several factors that you should look for in a lender. Before applying, you should thoroughly research a lender.
Repayment Terms
A loan's repayment term is the time frame a borrower has to pay back a personal loan. LendingClub has repayment terms ranging from 36 to 60 months, while Discover offers repayment terms from 36 to 84 months.
Longer loan terms typically equate to reduced monthly payments but higher overall costs. Because of this, it’s in your best interest to choose a loan with the shortest payback period and affordable monthly payments. However, the best duration for you to pay back a loan will depend on your circumstances.
Lenders generally consider your debt-to-income ratio and regular income when establishing your payback period.
According to MoneyGeek's analysis, Discover has an advantage over LendingClub in this area due to its more flexible payback periods. It provides loan payback lengths ranging from 36 to 84 months, which might be useful for people that want to pay back their loan over a longer period of time.
Loans with shorter payback durations often have lower interest rates, but your monthly payment will be higher.
Time to Receive Funds
When compared to conventional lenders, LendingClub and Discover disburse loan funds quickly. LendingClub and Discover may disburse your borrowed funds the next business day after you sign your personal loan agreement.
Since neither lender has an advantage over the other in terms of loan disbursement time, you should evaluate other factors, like APR and loan terms, to determine if it’s the right loan for you.
If you’re in a financial emergency, a fast disbursement time may be a significant advantage. Because of their next-day funding, LendingClub and Discover are both sound options for those in urgent need of funds. However, while quick turnaround times are preferable, they should not be your only consideration.
Final Thoughts
LendingClub and Discover each have features that would benefit particular borrowers. Discover stands out due to its low APR range and longer payback period. Meanwhile, LendingClub has a lower minimum credit score threshold, a lower loan minimum and a higher maximum loan amount.
Based on our review, the following borrower profiles are best suited for each lender:
- Discover is suitable for consumers with good credit who wish to benefit from attractive loan conditions and a longer repayment period.
- LendingClub is ideal for individuals with average credit scores or those who need a larger loan.
Frequently Asked Questions About Personal Loan Lenders
Getting a personal loan requires careful research. To assist you with the process, MoneyGeek provided answers to some commonly asked questions concerning personal loan lenders below.
To verify your eligibility and approve a personal loan, lenders often request documents proving your identity, residence, income, occupation and debt.
A free copy of your credit report is available from each of the three major credit reporting agencies — Equifax, Experian and TransUnion — or from the Annual Credit Report website once per year.
Most lenders perform a soft credit check during the prequalification process and a hard credit check during the application process.
No, interest rates vary depending on the lender.
Yes, most lenders charge fees like application fees, origination fees, prepayment penalty fees and late fees. However, not all lenders charge these fees.
It's easy and simple to apply for a loan online. This shortens the process, allowing for faster financing and approval.
Yes. However, check with your lender to see if there is a prepayment penalty fee.
sources
- Discover. "Discover Personal Loan." Accessed September 20, 2022.
- LendingClub. "LendingClub Personal Loan." Accessed September 20, 2022.
The content on this page is accurate as of the posting/last updated date; however, some of the rates mentioned may have changed. We recommend visiting the lender's website for the most up-to-date information available.
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