LendingClub vs. Upstart: Which Personal Loan Is Right for You?

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.

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.

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.

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.

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.

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.

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.

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.

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.