New Year's Resolution: Get Out of Credit Card Debt With a Lending Club Loan
Joshua McElravy of Fremont, Calif., recently used lending club to consolidate credit card debt into a personal loan and was able to cut his interest rates from 24% to 26% down to 7.88% with a fixed 36-month term.In an email interview, McElravy told WalletPop that he chose Lending Club over local banks because the banks all wanted collateral and he didn't want to put up his car, which he had already paid off, for a personal loan .
"I resolved in 2009 to get a hold of my credit card debt. I have been able to refinance about $10,000 total in credit card debt that would have taken several years to pay off, due to the high interest rates," McElravy told WalletPop, adding, "Although my monthly payment is about the same, I will have all of it payed off within the next two or three years. I plan on making extra payments when I can."
This experience is similar to what we found when we looked at what it is like to get a loan from a peer-to-peer lender in our review of Lending Club back in March. After 9 months with a new, lower loan rate and a fixed payment schedule, we are still happy with our peer-to-peer loan.
"As many Americans resolve to get rid of debt in the new year, a Lending Club personal loan offers a refreshing alternative to the traditional lending institutions," said Rob Garcia Sr. Director of Product Strategy at Lending Club. in an email to WalletPop, "better loan rates, instant rate quote, and fixed monthly payments mean our borrower can pay off existing balances faster and more cheaply."
The rates on peer-to-peer loans from Lending Club are favorable when compared to the credit card rates offered from many big issuers. The national average interest rate from Lending Club on a 36-month loan is 9.8%, while it is 14.34% on credit cards as reported on Creditcards.com. There are even greater savings to be had for borrowers with a good credit score.
In addition to the lower rate, we also like the ability to handle the entire lending process online with the exception of one phone call to verify some of the information. When you compare this to other lenders, such as Wells Fargo or Capital One that require you to call a banker or have an invitation to get a personal loan, the advantage is clear.
One caveat that McElravy notes is that you do need to have decent credit to get a loan through Lending Club. Currently, the minimum score is a 660, so not everyone will qualify. Another thing to keep in mind is that if you are a member of a credit union or a community bank, we do suggest you check with your banker because you can often get a favorable rate without lots of red tape or upselling.
If you want to cut your debt in 2011, getting a personal loan that transforms your high-interest rate credit card debt to a lower rate personal loan with a fixed repayment schedule is one of the best steps you can take. Thanks to Lending Club's streamlined online loan process, getting a personal loan is easier, and smarter, than ever.