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    Consolidation Loan Lenders Compared: Discover Versus LendingClub

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    Discover and LendingClub are two of the most popular online lenders for consolidation loans. Both are highly rated by users and offer a variety of benefits to their borrowers. 

    Here we will compare these two lenders by going over their fees, rates, max loan amounts as well as eligibility requirements.

    Discover Debt Consolidation Loans

    Over the last decade, Discover has become one of the most popular options for people with good credit who want to consolidate high-interest debt. It offers competitive interest rates, loans with no origination fee, and flexible payment options that aren’t offered by other online lenders.

    Loan Criteria

    APR 

    6.99% - 24.99% depending on the credit score 

    Fees

    -No origination fee

    -No prepayment fee

    -$39 late payment fee

    Loan Amounts

    $2,500 - $ 35,000

    Loan Term

    2 - 7 years

    Eligibility Requirements

    Like any lender, it requires the borrower to have a stable employment situation, a credit score of at least 660, and a debt to income ratio that allows them to take on more debt. Those with a lower credit score may still be approved but will be subject to higher interest rates.

    Pro's

    • No prepayment penalty
    • High user rating
    • Fast approval and deposit
    • No origination fee
    • Competitive interest rates
    • Offers longer payment term than most online lenders
    • Can pay creditors directly
    • Lower interest rates that can save the borrower thousands of dollars over the life of the loan

    Con's

    • Requires a good credit score to take advantage of low rates
    • Late fee charges higher than most at $39
    • Stricter eligibility requirements than some other lenders
    • No co-signer option
    • Maximum loan amount of $35,000
    • Subprime candidates are unlikely to be approved or receive a favorable interest rate

    How To Apply

    The application process requires a bit more information compared to other online lenders. However, approval and deposit times are still less than traditional brick and mortar lenders.

    Step 1

    Visit the website, find the loan application section, and enter the required personal and financial information

    Step 2

    Choose the desired loan amount between $2,500 and $35,000

    Step 3

    State the desired loan term between 2 and 7 years

    Step 4

    Provide proof of employment

    Step 5

    Submit application and wait for a response

    LendingClub Debt Consolidation Loans

    LendingClub has become one of the most popular online lenders of consolidation loans. While their loans may come with slightly higher interest rates, it’s willing to work with individuals with lower credit scores.


    Loan Criteria

    APR 

    10.68% - 35.89% depending on the credit score 

    Fees

    -Origination fee of 2% - 6%

    -No prepayment fee

    -A late fee of $15 or 5$, whichever is greater

    Loan Amounts

    $2,500 - $ 40,000

    Loan Term

    30 - 60-month repayment term

    Eligibility Requirements

    LendingClub has less strict lending criteria and is even willing to work with individuals with credit scores as low as 600 - 640.

    Here are the eligibility criteria:

    • A minimum credit score of 600
    • Minimum of three  years of credit history
    • A debt-to-income ratio of 40% or less
    • A stable employment situation

    Pro's

    • No prepayment penalty
    • Willing to work with individuals with lower than average credit scores
    • Cosigner options available
    • Offers direct payment to the creditor to switch consolidation loans

    Con's

    • Somewhat higher interest rates than other lenders
    • Origination fees are applicable
    • Late fees are charged for missed payments

    How To Apply

    Step 1

    Provide your personal and financial information

    Step 2

    Decide upon the loan type and desired loan amount

    Step 3

    Complete the pre-approval process and provide LendingClub with Social Security Numbers and employment information

    Step 4

    Submit the application and wait for a response

    Step 5

    If the loan is approved, the borrower must formally accept the loan and its offered terms

    Bottom Line

    Consolidation loans allow individuals to pay off their debt and regain control over their financial situation. Selecting a lender depends largely upon your particular situation. Factors such as debt-to-income ratio, credit score and history, employment situation, and the total amount of debt are all important items to consider.

    Generally speaking, those with a good credit score of 700 or higher should take advantage of the lower interest rates and longer repayment terms offered by Discover. While LendingClub may also offer competitive rates to some applicants, many of their products are geared towards individuals with lower than average credit scores.