LendingClub vs. SoFi: Which Personal Loan Is Right for You?
Updated: July 25, 2023
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MoneyGeek collected information about LendingClub and SoFi to help you choose between the two lenders. We strive to keep our information up-to-date to make relevant comparisons of different personal loan lenders. Through these efforts, MoneyGeek remains a trusted source of information, guiding you in comparing the most prominent personal loan lenders in the U.S.
Based on the data we collected, LendingClub and SoFi have their individual strengths. SoFi personal loans waive certain fees and offer unemployment protection. LendingClub, on the other hand, has different types of personal loans to cater to a wide array of your financial needs.
LendingClub or SoFi: Overview
MoneyGeek compiled the pros, cons and key information that you might consider when choosing between LendingClub and SoFi. We found that there are significant differences in their APRs, loan amounts, credit score requirements, repayment terms and fund disbursement.
There may be other factors that can affect your decision since each lender has unique features. For example, LendingClub allows borrowers to change their payment dates and gives them a 15-day grace period. One of SoFi’s most notable features is that it does not have fees.
LendingClub
SoFi
APR Range
The annual percentage rate (APR) reflects the annual amount that you will pay for your loan. It includes the fees and charges attached to your loan. Lenders are required to disclose the APR so that you’re aware of the true cost of your loan. Your credit score, loan terms, payment history and other financial factors affect your APR.
LendingClub’s APR range is 7.04% to 35.89%, while SoFi’s APR range is 5.74% to 20.28%. SoFi has a significantly lower APR than LendingClub. These comparisons matter when you’re trying to assess which lender’s APRs would work best for you, as the APR you receive will be based on your credit score.
If you have an exceptional credit profile, you might qualify for the lowest rate from SoFi. On the other hand, if you’re not confident about your creditworthiness, LendingClub might be a safer choice.
Having a lower interest rate on your loan means you’ll be paying less for your loan over time. It can help you save money throughout your repayment term, although your APR may also depend on the term you choose.
Creditworthiness and loan terms are just two of the many factors that can influence your APR. Your loan amount and lender of choice’s underwriting process can also impact the APR you receive.
Minimum Credit Score
Your credit score is a significant factor that determines the approval of your loan application. A higher credit score increases your chances of approval, but every lender has different credit requirements.
For instance, borrowers need to have a credit score of at least 680 to qualify for a SoFi personal loan. Meanwhile, borrowers only need a credit score of 600 to get a LendingClub personal loan. Though LendingClub has lower credit score requirements, there are other factors that may influence your application.
A credit score is a measure of your financial stability and responsibility. Your payment history, debt-to-income ratio and your credit history are some of the most important factors that influence your score.
Borrowers with poor credit scores may still be eligible for a personal loan with LendingClub, as the provider has a minimum credit score requirement of 600.
Lenders that have low credit score requirements permit more borrowers to obtain loans. However, if you have a low credit score, you’ll likely pay more in interest. As a result, you will have to pay more over the life of your personal loan compared to a borrower with a good credit score.
Aside from credit scores, lenders consider other factors, like employment and educational status. Learning more about these factors can help increase the likelihood that you’ll be approved for a loan.
Loan Amount Range
LendingClub personal loans range from $1,000 to $40,000. SoFi, on the other hand, provides loans of $5,000 to $100,000. Take note, however, that the amount that can be approved for your loan depends on several factors, including creditworthiness.
The better option for you depends on how much funding you need. This is why it’s important to know the purpose of your loan and the amount you need before applying.
Additionally, knowing the loan amount ranges of lenders helps narrow down your options. For example, if you need funds for large expenses, SoFi is the better option since it can give you as much as $100,000 in loans. If you’re only looking for a small loan, LendingClub can give you a loan of at least $1,000.
SoFi has a more flexible loan amount, but it’s best for borrowers looking to fund larger expenses, rather than those that need small loans. So, if you only need to take out a loan of $1,000, LendingClub could be a better fit for you.
Because of this, it’s best to know your expenses and goals before taking out a loan. It helps you know how much funding you need and which lender to choose, although it’s always better to consider other factors when looking for a loan.
Repayment Terms
Repayment terms refer to the period of time over which you’ll repay your loan. LendingClub offers repayment options from 36 to 60 months, while SoFi personal loans feature repayment terms from 12 to 60 months.
The repayment term you choose impacts your monthly dues. For example, choosing a longer repayment term of 84 months will allow you to make smaller monthly installments, but you may end up paying more in interest since it will take longer to repay.
SoFi has more flexible repayment terms that are great for short-term and long-term loans. A lender that gives you more options for repayment terms allows you to explore your possible rates and monthly installments. It’s best to consider these terms along with other factors while you’re picking a lender.
In choosing a term, pay close attention to your ability to meet your dues. It might feel great to pay off your loan as fast as possible, but it also means paying more every month.
Time to Receive Funds
Once your loan application has been approved, LendingClub can release your funds the next day. SoFi provides funding relatively quickly, too, with funds typically disbursed after two days. Between the two lenders, LendingClub has faster loan disbursement, making it great for borrowers who need urgent funding.
Since these disbursement periods are based on the average cases for each lender, your fund disbursement time may vary. Factors like an incomplete or incorrect application can affect the disbursement time. Online applications may also be approved faster than in-person applications.
LendingClub has a faster fund disbursement as it releases the funds the day after approval. Choosing a lender that has a short disbursement time may be a priority for borrowers who need funds quickly.
Situations like emergencies, paying off debts and home repairs may require urgent funds. So, sooner fund release means borrowers can use them as fast as possible. At the end of the day, the disbursement time should be factored in with other features of the loan when looking for a lender.
Final Thoughts
LendingClub and SoFi have their own strengths, depending on what you’re looking for. LendingClub’s personal loans are more accessible because of their lower credit score requirement. It’s also great for borrowers looking for smaller loan amounts.
SoFi personal loans are best for borrowers with good credit who want to save money on fees, especially if they’re taking out large loans. Its repayment terms are more flexible as you have more options to choose from.
It’s important to explore a wide range of factors when looking for a personal loan. These factors come into play based on your personal circumstances. For instance, the differences in APRs may be more beneficial to you depending on your credit score. SoFi’s maximum APR may be more favorable if you have bad credit.
Frequently Asked Questions About Personal Loan Lenders
MoneyGeek answered commonly asked questions to give you more information about factors, application processes and other inquiries about personal loans and lenders.
Personal loan lenders may require you to provide identification, address verification, proof of income, employment and documents to show your existing debts. These help them verify information about you as well as determine your eligibility for the loan.
Some loan or credit card statements include your credit score. You can also pay to check your score by contacting one of the three major credit bureaus or get it for free from the Annual Credit Report website.
It depends on your lender. LendingClub and SoFi, for example, conduct a hard inquiry if you decide to continue with your application.
No, interest rates vary for all lenders. The rate you receive depends on many factors, including your credit score, the prime rate, your choice of lender and so on.
It depends on your lender. Some lenders, like SoFi, don’t charge fees. It’s best to research thoroughly on lenders and read the fine print to know what fees are included in your loan.
As long as you have the necessary documents with you, applying online is more convenient and your application will be processed faster.
Lenders may allow you to pay your loans early, but some lenders charge prepayment penalties.
sources
- LendingClub. "Personal Loans Rates & Fees." Accessed September 19, 2022.
- SoFi. "Personal Loans." Accessed September 19, 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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