LendingClub vs. Upstart: Which Personal Loan Is Right for You?
Updated: July 25, 2023
Advertising & Editorial Disclosure
LendingClub is a fintech startup with a digital marketplace that connects lenders and borrowers with fair credit or better to provide loans of up to $40,000. Upstart is a loan platform driven by artificial intelligence that connects borrowers with its lending partners and caters to applicants with poor credit or those without much credit history.
This comparison is intended to assist various borrowers in selecting one of the two lenders. We will examine the specifics of the companies' interest rates, eligibility criteria, fees and other pertinent factors.
LendingClub or Upstart: Overview
MoneyGeek compares and contrasts LendingClub and Upstart, discussing their respective pros and cons in key areas, such as maximum loan amounts, annual percentage rates (APRs), minimum credit scores, funding timelines and repayment terms.
Each lender has its own set of criteria for approving borrowers and determining the loan amounts it will issue. And while both offer next-day loans once approved, Upstart has more flexibility in terms of credit score requirements and loan amounts.
LendingClub
Upstart
APR Range
Upstart provides personal loans with APRs from 3.22% to 35.99%. In contrast, APRs at LendingClub range from 7.04% to 35.89%, depending on creditworthiness. Upstart’s lower minimum APR gives it a slight edge over LendingClub.
A loan’s annual percentage rate, or APR, is the amount of interest that must be repaid on it each year. Your credit score and risk profile are the primary determinants of the APR you'll receive, along with other variables affecting the rate, like the loan size and repayment term.
While it's always preferable to secure a personal loan with the lowest possible APR, it shouldn't be the only deciding factor.
With variable APRs starting at just 3.22% (based on borrower creditworthiness), Upstart is clearly the winner in this category. That said, in order to take advantage of Upstart's low minimum annual percentage rate, applicants must have good credit.
Note that a higher APR significantly raises the overall cost of a loan. Before committing to a loan, it is prudent to analyze your alternatives and shop around to make sure you’re getting the best personal loan for your specific needs.
Minimum Credit Score
Upstart is among the very few lenders that accept applicants with poor or insufficient credit scores. For a personal loan, LendingClub requires a minimum credit score of 600, whereas Upstart only requires a score of 300. This difference of 300 points is substantial.
Based on data from your credit report, the three main credit agencies generate your credit score, a numerical rating of your creditworthiness. Credit scores assist lenders in determining whether you are worthy of a loan and help them set your APR, loan term and loan amount.
Generally, your credit score will fall somewhere in the range of 300 to 850. Applicants with credit scores of 670 or higher are commonly seen as low-risk by lenders. This makes them ideal candidates for loans and other financial products like credit cards.
Keep in mind that your score may be impacted by things like your credit history, unpaid debts, credit account types (loans, mortgages and credit cards) and any pending credit applications.
Because of its emphasis on applicants with poor or insufficient credit histories, Upstart is the winner in this category compared to LendingClub. Low credit score requirements mean that more people are eligible for a company’s loan products. We caution you, however, against dismissing the necessity of raising your credit score if you want a variety of lenders to choose from.
Even with Upstart, note that if your credit score is less-than-ideal, your annual percentage rate can be very high, which increases the monthly payments and your loan’s total cost.
Keep in mind that there are many other considerations to make when determining the best lender for your needs, in addition to APR ranges.
Loan Amount Range
Upstart's loan amounts range from $1,000 to $50,000, whereas LendingClub's loans are capped at $40,000. This makes Upstart the best choice for big purchases. The loan range indicates the upper and lower limits of what borrowers can request from the lending company. How much you should borrow will depend on your needs and how much a lender is willing to lend you.
The typical starting limit for some personal loan providers is $5,000, which may be too much for borrowers seeking smaller sums. Regardless of the lender's maximum limit, the loan amount you choose and the lender authorizes will rely on a number of factors, including your credit score, the loan's payback term, the purpose of the loan and other lender-specific conditions.
As a result, it is wise to choose a lender that is prepared to adjust your loan amount to suit your specific needs.
Upstart outperforms LendingClub in terms of maximum loan amounts, while both lenders offer the same minimum loan amount.
Your circumstances and the planned use of the funds will determine how much you need for a personal loan. Smaller loans are great for emergency situations, but larger loan amounts are more practical for things like consolidating debt or renovating a home. You should not borrow more money than you actually require.
Before deciding on a loan, you must evaluate a variety of factors in addition to the loan amount. Always do a thorough investigation of a prospective lender before you apply.
Repayment Terms
Both LendingClub and Upstart offer personal loan payback terms ranging between 36 and 60 months.
The repayment term of a personal loan determines how long it will take to pay it off. While long-term loans may run up to seven years or 84 months, short-term loans typically have terms of one or two years. Longer terms are connected with lower monthly payments but might result in higher total expenditures.
A loan with a short term and affordable monthly payments will be your best option. Note that this can change based on your individual situation. For instance, you may choose to select a longer term for smaller payments if you have other outstanding debts to pay off.
Your credit score is one of the other factors impacting the term of your loan's repayment period. Lenders may also analyze your ability to repay based on your income, debts and debt-to-income ratio to decide your repayment period.
LendingClub and Upstart offer the same loan repayment terms, resulting in a tie in this comparison. Regardless of their higher monthly payments, loans with shorter terms typically carry a lower APR and lower total costs. The borrower chooses the payback term at their discretion from the options provided by the lender, depending on their unique circumstances.
To make a decision that is well-informed and reflective of all relevant information, you must take into account every aspect of the loan and the lender.
Time to Receive Funds
The majority of personal loans are processed and funded on the following business day, regardless of which of these two lenders you choose.
When time is of the essence, and you require the loan urgently, it is best to submit the application online rather than in person. The majority of lenders will let you check to see if you are prequalified for their loan before you actually apply for one, and doing so will not hurt your credit score in most cases.
Additionally, if you supply all of the appropriate documentation, your application has a better chance of being accepted immediately, which will facilitate a faster release of funds.
Both LendingClub and Upstart typically disburse funds on the following business day, making this comparison a tie.
The sooner your funds are disbursed, the sooner you may utilize the money for your needs, which is typically advantageous if the funds are required for an emergency. However, this criterion alone should not be used to compare lenders, particularly when the requirement is not urgent or when there is no difference between the lenders.
Final Thoughts
Due to the similarity in some of the aspects we compared, choosing between LendingClub and Upstart for a personal loan can be a little challenging. You may need to consider a number of aspects to compare the two lenders unless you have a limited credit history or poor credit score, in which case Upstart would be your only option.
Also, borrowers who prove themselves highly creditworthy can benefit from Upstart's competitive interest rates. Besides that, Upstart's maximum loan amount is higher than LendingClub's, but the minimum amount is the same.
When it comes to the loan repayment terms and the amount of time it takes to get funds, LendingClub and Upstart are nearly identical. It’s best to compare offers from both companies to see if there’s a big difference between the APRs offered to you. This will help you determine the winner of this comparison for your unique needs.
Frequently Asked Questions About Personal Loan Lenders
We've answered some of the most frequently asked questions regarding personal loans so you can better understand the process and discover the perfect lender for your situation.
Lenders typically require proof of your identity, address, employment, income and any outstanding debts to verify and approve your loan application, in addition to filling out the application itself.
The Annual Credit Report website gives you access to your credit report and scores for free. Most credit card companies also provide free access to credit scores for their members.
Most lenders, including LendingClub and Upstart, do a hard credit inquiry during the application process and a soft credit inquiry for pre-approval purposes. However, the hard credit check can reduce your credit score temporarily, which can be improved over time.
No. Personal loan interest rates vary widely among lenders, and they utilize different variables to calculate your APR. It is best to compare rates from several lenders to find the best deal for you.
It depends. The primary charges associated with a personal loan are its application fee, origination fee, late payment fee and prepayment penalty. Some lenders only charge some of these fees, and some don’t assess any of them.
The most convenient way to apply for a personal loan is online, as long as you have the essential documents in hand. This boosts your chances of receiving faster approvals and payments without leaving the comfort of your home.
You can make early payments on your loans. However, a prepayment penalty may be assessed by some lenders.
sources
- LendingClub. "Personal Loans." Accessed September 21, 2022.
- Upstart. "Personal Loans." Accessed September 21, 2022.
- Upstart. "What Are the Minimum Credit Requirements to Receive a Loan?." Accessed September 21, 2022.
- USA.gov. "Credit Reports and Scores." Accessed September 21, 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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