SoFi vs. LendingClub: Which offers better personal loans?
SoFi began in 2011 as a student-focused lender but has since expanded to offer personal loans and other banking services. LendingClub was founded in 2006 as a peer-to-peer lending platform. In 2020, the company acquired Radius Bank and changed its business model to traditional banking and lending. Both online lenders are good alternatives if you’re looking for a personal loan, but they cater to different consumer needs.
SoFi vs. LendingClub at a glance
Both lenders offer solid personal loans that can help in various financial situations. However, there are key differences that may impact your choice.
SoFi | LendingClub | |
|---|---|---|
Bankrate Score | 4.8 | 4.4 |
Better for |
|
|
Loan amounts | $5,000-$100,000 | $1,000-$40,000 |
APRs | 8.99%-25.81% Fixed APR | 5.66%-35.99% Fixed APR |
Loan term lengths | 24-84 months | 24-60 months |
Fees | No origination fees, late payment fees or prepayment penalty |
|
Minimum credit score | 680 | Not disclosed |
Time to funding | Same-day you’re approved | Within four business days, on average |
SoFi personal loans
Rating: 4.8 stars out of 5
Learn morein our Bankrate review
Bankrate's view
SoFi is an online lender that offers a suite of credit, banking and investing products. If you’re already taking advantage of SoFi’s other offerings, borrowing from SoFi and keeping your accounts in one place might be convenient.
SoFi’s minimum credit score requirement is on the higher end when compared to similar lenders, so it may not be the best option for those who lack a strong credit profile. That said, SoFi does accept co-borrowers, which could boost your chances of approval.
SoFi doesn’t charge origination fees, late payment fees or prepayment penalties, which can save you money on your monthly payments. The lender also offers flexible terms. Loans can have terms as short as two years or as long as seven years, with amounts of up to $100,000.
Additionally, SoFi offers exclusive rewards, discounts and unemployment protection assistance for its customers. The latter is pretty much a unique feature in the personal loan industry, as it not only temporarily pauses payments but also gives you access to career tools to help you get back on your feet.
Pros and cons
Green circle with a checkmark inside Pros
No origination fees or late payment fees.
Wide range of loan terms.
High loan maximum.
Red circle with an X inside Cons
High credit score requirement.
Higher starting APR.
Minimum loan amount of $5,000.
LendingClub personal loans
Rating: 4.4 stars out of 5
Learn morein our Bankrate review
Bankrate's view
LendingClub began as a peer-to-peer lending platform but has since transitioned to be a more traditional bank and lender. Its loans feature competitive starting APRs and a lower minimum amount requirement, making them an attractive option in small emergencies and to consolidate debt.
But because of its wide range of rates, its loans tend to be more expensive than SoFi. LendingClub also charges an origination fee between 1 to 8 percent. While it may not seem like much, it will impact the total amount you can borrow — which means you may wind up spending more over time. That can make it a hard sell to go with LendingClub if you’re eligible for a SoFi loan.
Pros and cons
Green circle with a checkmark inside Pros
No set credit score requirement.
Co-borrowers accepted.
Smaller loans available.
Red circle with an X inside Cons
Origination fees and late payment fees.
Higher interest rate caps.
Lower maximum loan amount.
How to choose between SoFi and LendingClub
SoFi and LendingClub are both good choices if you need a personal loan, but excel in different scenarios.
Choose SoFi for large, flexible loans
If you need to borrow a large amount, SoFi is the better option. It offers loans up to $100,000, making it the better choice if you need to fund a large purchase or an expensive home improvement project.
SoFi also has more flexible terms. This lets you take more or less time to repay what you borrow, which in turn makes it much easier to customize your monthly payment to fit your budget.
Unlike many online lenders, SoFi doesn’t charge an origination fee or late payment fees. Its loans also have a lower rate cap than LendingClub’s. While not guaranteed, SoFi’s loan will be less expensive overall, especially if you have good or excellent credit.
Choose LendingClub for smaller expenses or to consolidate debt
LendingClub offers loans as small as $1,000, compared to SoFi’s $5,000 minimum. This makes it a better choice if you just need a small cash boost to cover a small expense, such as a car repair or replacing an appliance.
Though both LendingClub and SoFi offer direct payment to creditors, LendingClub’s starting APR is much lower than SoFi’s. Depending on your credit score and origination fee, LendingClub’s loans could provide greater savings than SoFi’s, making it a better alternative to consolidate high-interest debt.
Compare more lenders before applying
SoFi and LendingClub can be good choices for lenders, but SoFi may be the better option for most people. Its loans are more flexible and have fewer fees, along with an autopay discount and other member benefits. If you’re eligible for a SoFi loan, there’s a good chance it’ll be the better deal.
Still, applying for a loan from LendingClub isn’t bad because it will let you compare your offers. You may also find LendingClub a much cheaper option if you can secure the lowest APR and origination fee.
That said, these two lenders are not your only borrowing options. Compare rates from other lenders as well before committing to one. This will ensure you’re getting the best deal possible for your situation.
