What's going on everybody?
So in today's video, I'm going to be going over the differences between SoFi and LendingClub
and which one I prefer.
And I've actually used both lending services previously.
I think I've got multiple loans from LendingClub.
I've also gotten a loan from SoFi, so I'm going to tell you the ins and outs of how
these companies work, what to expect, which one I prefer.
So you're definitely going to want to watch all the way to the end of this 10 minute video.
And that being said, let's jump into it.
Okay, so to start with, both LendingClub and SoFi allow you to apply for a loan for various
different reasons.
SoFi was actually started in regards to the student debt crisis, so a lot of people use
it for student debt consolidation.
However, you can also just get personal loans.
You can get credit card consolidation loans, auto loans, home improvement loans, different
things like that.
I actually use the loans to basically fix up a property as well as purchase a property.
However, there's a wide variety of options, and you'll have to just apply and choose the
right one for you.
Now, as far as the application process, both companies, I would give an A+ in terms of
how easy it is to apply for a loan.
It's basically just a simple online form.
You might have to fill out five or six questions, and it would take all of five or 10 minutes
to complete this.
What's pretty cool about both sites as well, is that they allow you to check to see how
much you'd be qualified for.
And it's just a soft credit check, so they're not going to do a hard inquiry unless you
actually complete the full application.
Now, I would say the one big difference between the applications is that SoFi is going to
be more strict with their application, and they're going to want to verify typically
your income, obviously your credit score as well, but they possibly will ask for a few
more documents than LendingClub.
With LendingClub, it's more of just a credit check, and your credit score doesn't need
to be as high with LendingClub as it does with SoFi.
So SoFi it's more targeted at the higher income, higher credit score potential borrowers.
And I think the minimum credit score to even apply with SoFi is 680, and I think the average
score is about 700 from what I've read about.
And that brings me to my next big difference between the two services, which is the interest
rate.
So it with SoFi, because it's a higher credit, higher income type of borrower, the interest
rate is going to be significantly less than LendingClub.
So with SoFi, it's going to be somewhere between 6% and, I think, 20%.
And I think the 20% would really be on the extremely high side.
And with LendingClub, the interest rate for borrowers is going to be anywhere from 10%
up to 36%, which is pretty extreme.
However, SoFi wouldn't even give a loan option to some of these lower credit borrowers.
So they both have their pros and cons.
Now, as far as how much you're actually able to borrow.
SoFi does loans from anywhere from 5,000 up to 100,000, which is pretty insane because
there's almost nowhere where you can get a personal loan for 100,000 or anywhere near
that amount.
You could try going to a bank or some local credit union, but you'd be lucky if you got
like 10,000 or 15,000.
And the loan that I got from SoFi was not 100,000 or anywhere near 100,000, so I don't
know if that's just for extremely well-qualified buyers that have $500,000 worth the cash in
the bank, or if that's something that they give out every now and then.
So it's something I'll have to do a little bit more research on.
However, as far as LendingClub goes, they are more in the range of lending out 1,000
to $40,000 from a personal loan standpoint.
So that's going to be significantly less than SoFi, but again, not everyone's going to need
a loan for 5,000 to a 100,000.
Sometimes you might just need a $1,000, 2,000, 3,000.
So LendingClub can be a good option if you just need a smaller amount.
Next step, we have origination fees, and this is one category where SoFi has a huge advantage
over LendingClub.
So SoFi charges $0 in origination fees, so there's no junk charges or any mysterious
charges that you see.
Whereas LendingClub has, I think it's between one to 6% of the loan, they're going to charge
you in terms of an origination fee.
So if you apply for, let's say, a $20,000 loan with LendingClub, one to 6% of that is
going to go towards their fees.
So you're not going to get 20,000.
You're going to get one to 6% subtracted from 20,000.
So it's a little bit of a difference there.
Another part of the process where I think SoFi has a massive advantage over LendingClub
is that if you set up autopay with SoFi, you get a 0.25% discount on the interest or terms
of your loan.
So you're going to save, over the course of your loan, probably hundreds maybe even thousands
of dollars just by setting up auto-pay, which is simple and pretty easy to do and you should
do that anyways.
Next step, we have the loan terms.
And as far as the terms of the loan, the length of the loan, they're both pretty comparable.
LendingClub is going to be anywhere from three to five years for the terms of the loan.
And SoFi its going to be from two to seven years.
So you have a little bit more flexibility with SoFi, but again, it's not a huge difference
there.
And if you want to be a good borrower and pay off your loan early, the good thing about
both sides is neither of them charge a prepayment penalty.
I can barely say that.
Prepayment penalty.
In fact, I think most lenders in terms of mortgages and different types of loans, don't
really charge prepayment penalties anymore.
I think with a lot of the Dodd-Frank or just different changes in lending, that policy
has gone away, but obviously you should always check with any lender.
Next step, we have the length of time it takes to actually get funded from the time you apply
for one of these loans.
And the good thing about both lenders is that you can actually get funded within a few days
or possibly up to a week if they need additional information.
So I think both lenders are pretty, even in that category.
Once you apply and if you're qualified, you should be receiving the money pretty quickly.
I mean, literally, two, three, four or five days, you can have the funds in your bank
account.
One additional thing I forgot to mention is that SoFi actually has a couple of cool features.
So they have career coaching.
They have networking opportunities where maybe you can just go and hang out with other SoFi
people and talk about your loan.
And they also have unemployment protection.
So I don't know the full specifics behind the unemployment protection, but I'm assuming
if you lose your job then you might not be on the full hook for the loan, or maybe they'll
give you some type of protection in regards to it.
So SoFi really seem to be going above and beyond just being your local lender, so to
speak.
Now, overall, my official review of both of these companies.
I prefer SoFi.
If you have a good credit score and a solid income, SoFi is definitely going to be your
best bet.
However, if you're not looking for a loan of 5,000, 10,000, or 100,000, then LendingClub
is also a great resource.
You're going to be paying a little bit of a higher interest rate.
However, it's going to be much more flexible.
You're not going to have to show as many documents, and it can be great for someone that just
needs a few thousand bucks for debt consolidation or whatever it may be.
Now, before we get to the end of this video, I just wanted to quickly show you three additional
websites and what their thoughts are on the differences between LendingClub and SoFi just
so you can have a total of four opinions and come to a consensus as far as the differences
in which one is better.
So here we have NerdWallet, and NerdWallet is obviously one of the most respected personal
finance sites out there.
LendingClub may be better if you want a smaller loan, you have a good credit history, low
debt to income ratio.
And look, it says, LendingClub accepts applicants with lower credit scores.
And SoFi, minimum credit score is 600.
So you don't need to have a 680 or even 700 credit score like you do with SoFi.
And it has a lot more information that you can go through on NerdWallet if you want to
see that.
Let's look at SoFi.
So SoFi is going to be a better option if you have a good credit score, good income,
and you want the lowest rate, you don't want to pay origination fees, and you potentially
want a larger loan.
So it has a lot more information, but that pretty much just confirms what I was telling
you about.
This is credible.com, so sounds credible, hopefully.
LendingClub personal loans, best for people that need smaller loans and with less than
perfect credit.
So just like I was talking about.
And I didn't really get into this, but LendingClub is a peer to peer marketplace as it says right
here, which means that your loan of let's say $10,000 might be funded by 200 people
across the United States who will invest, $500 here, $20 there, $1,000 there.
And then depending on your credit score and what you're using the money for, and the risk
profile that LendingClub assigns to you, that's how the investors will get a return on their
money, and that's how they will determine what your interest rate will be as well as
the borrower.
So it's a cool concept.
And I, haven't actually invested in LendingClub.
I've heard mixed reviews.
If you do it correctly, you can do very well and make some passive income.
But if you just invest in like the 36% loans, you might not do as well.
And it just goes into a little bit more, lower credit requirements, smaller loan options,
higher fees, longer processing time, not available to residents in Iowa.
I didn't realize that Puerto Rico or Guam.
Let's look at SoFi real quick.
So again, SoFi is good for good to excellent credit, those who need large loan amounts,
people who want to avoid costly fees.
The auto-pay, higher loan maximums, unemployment protection, and also co-signers.
So I think actually both of these have co-signer options if you want to increase the likelihood
of getting accepted.
Lastly, we have the website MagnifyMoney.
SoFi might be a better option, high credit scores, more money, no origination fees, you
get the idea.
Hopefully I'm drilling this in your head, which one is better.
They're both very good options.
It just depends.
So if I were you and you were looking for funds to fix up a house or for something else,
I would check with both companies and see where your interest rate would be, see what
the terms of the loan would be.
And then if it makes sense, do the full application and they'll do a hard credit check, but they're
both good options.
And they both have their pros and cons.
So thanks again for watching, and if you have any questions, drop them below, and I'll see
you in the next video.
All right, bye.