Types Of Debt That Can Be Consolidated
The purpose of a consolidation loan is to combine various small debts with high APRs into a single affordable loan, which can be repaid in a fixed number of installments to eliminate it.
LendingClub provides various consolidation solutions for customers with credit card debt, outstanding personal loans, and other credit types that could benefit from being merged into a single loan amount at a lower interest rate. However, the following types of debts are ineligible for consolidation:
- Post-secondary student debt
- Financing the purchase of investments and securities
- Borrowing money to engage in any illegal activities
LendingTree applies a similar set of requirements and restrictions to its financing marketplace.
The winner: Tie - While LendingClub explicitly states what type of debt can be consolidated using its products, the terms and conditions from LendingTree will depend on the specific lender you select through the marketplace.
Consolidation Loan Size
The maximum loan amount offered for consolidation purposes is a critically important factor for any applicant.
- Both lenders in our review offer reasonably generous consolidation loan limits with LendingTree partners providing financing for amounts between $1,000 and $50,000 while LendingClub provides a maximum amount of $40,000
- If the total amount of your outstanding debts is on the lower side, you may want to base your final choice on other factors like APRs, repayment terms, and fees. Still, applicants who require a loan of $40,000 or more will want to consider LendingTree
The winner: LendingTree - This lender wins with an extra $10,000 in potential consolidation financing available at the upper limit of its loan amount range.
Consolidation Loan Interest Rates & Duration
Both loan providers under review offer various repayment terms with interest rates varying according to your FICO score.
- LendingTree is an aggregator that brings some of the most popular lenders in the US together on one website to help customers compare offers before securing the best possible product. As a result, the interest rates you’re likely to be charged will depend on the specific company you choose. The repayment periods specified by the company may range from one month to more than two decades
- By contrast, LendingClub can specify its lending terms more transparently at the outset. The APR range available to borrowers ranges from 10.68% to 35.89%, depending on your creditworthiness. Loan repayment terms start at six months and extend to a maximum of five years
The winner: Tie - LendingTree offers more extended repayment periods and varied loan APRs through its partner financing providers. Its competition delivers a smaller range of products with shorter repayment terms and clearly stated APRs. The lender and loan that best suit your needs are likely to determine which company is more suitable for your specific financial circumstances.
The following requirements need to be met for prospective applicants to qualify for financing from the two lenders under consideration.
- For consolidation products, LendingClub usually caters to individuals with FICO numbers of 600 or higher, credit history of at least three years, and a debt-to-income ratio below 40% (or 35% for joint applicants). The company will use your credit score and other factors to assign you a unique credit rating ranging from A1 to G5, with APRs increasing accordingly
- LendingTree doesn’t have stringent qualifying criteria itself, but the various lenders offering financing products through the website have their specific prerequisites. It’s safe to assume that these minimum requirements will be similar to those you’ll encounter from LendingClub
The winner: Tie - Whichever company you choose, you’ll need to meet the standard requirements expected from applicants.
Application & Approval Process
Both LendingClub and LendingTree score well in this regard, with several differences distinguishing their respective offerings.
- Both lenders feature an entirely online application process that can be handled in minutes. The information required during the application is in line with industry guidelines: personal identification documents, proof of residence, proof of income, and a credit check
- Although it tends to require more information at the outset, a LendingClub funding decision is typically reached within a few days. LendingTree may require fewer details for pre-approval, but the specific lender you’re matched with is likely to require a comprehensive set of information before you finalize your application
- It’s important to note that both providers require their applicants to be permanent residents or citizens of the United States. Moreover, LendingClub excludes residents of Iowa and West Virginia from applying for its financing products
The winner: LendingTree - The quick application process, access to a large variety of lenders, and no state-specific exclusions give this company a distinct edge.
Many lenders charge a range of fees and interest charges, which can significantly raise the cost of borrowing for large loan amounts or long-term borrowing. It’s essential to be aware of all the costs associated with your consolidation financing before deciding on a provider.
- Unlike traditional lenders, LendingTree doesn’t charge any fees and instead derives its commissions from referring borrowers to the lending companies in its network. However, there may be fees associated with the specific lender you end up selecting through the site, which you’ll need to assess on a case-by-case basis
- By comparison, LendingClub charges several different fees on its loan products. These include an origination fee of between 1.00% and 6.00%, a 5.00% or $15.00 late payment penalty, and a $7.00 fee for check payments
The winner: LendingTree - Participating lenders in this marketplace may charge fees for loans, but the lack of upfront charges and range of available choices means that you’ll be able to shop around for the most affordable financing solution.
Special Benefits & Offers
There are several additional benefits that you could enjoy by opting to borrow through either company.
- Keep an eye on your creditworthiness with LendingTree’s credit scoring and monitoring service. Check your FICO numbers and improve them over time to increase your chances of loan approval
- In addition to its consolidation offerings, LendingClub features a range of investment products. Existing customers can qualify for special offers while addressing their borrowing and investing needs with the same provider
The winner: LendingTree - Borrowers who want to boost their credit scores and secure favorable lending terms may prefer this marketplace’s value-added offering.
LendingTree Vs. LendingClub - Comparison
Up to $50,000
Up to $40,000
Minimum Credit Score
Not specified - lender specific
One month - 25 years
Six months - five years
Application Approval Time
Within 24 hours
Within several days
Varies by lender
1.00%-6.00% origination fee; late payment fee ($15.00 or 5.00%); check payment fee ($7.00)
Which Is Better?
The better choice between these two debt relief destinations ultimately rests on a borrower’s preferences and needs.
As a leading loan aggregator and marketplace, LendingTree gives prospective borrowers access to some of the US’s top financing products. Still, matching with a lender is just one of the many steps you need to undertake before settling on a solution that meets your needs and is affordable.
Unlike its competition, LendingClub offers the certainty of knowing exactly how much you can borrow along with what fees and interest rates are likely to apply to your financing. However, the higher origination fees and more limited scope of offerings (as well as the lower maximum loan amount and shorter lending terms) make this lender slightly less competitive in our view.
Overall, debt consolidation customers are likely to enjoy the variety and potential savings LendingTree has been offering the market for decades. Accordingly, the marketplace edges out LendingClub to finish as our overall winner.