It is an established thing that better loans require better credit scores. With an excellent credit score and a good debt-to-income ratio, a borrower can get the best loans being offered by lenders out there. Hence, it’s always a good idea to keep your credit score in stellar condition.
Some of the best personal loan offerings in the market right now for people with good credit are from Marcus and LendingClub. Both loans are great for major financial transactions like debt consolidation, major purchases, and one-time expenses like weddings.
Would it be better to take a loan from a lending fledgling like Marcus, or would a popular lending co-op like LendingClub has better lending options?
In this article, we will compare the personal loans offered by both Marcus and LendingClub to see which one is better based on your situation.
Marcus by Goldman Sachs | Full Overview
Goldman Sachs is not a newcomer when it comes to investment and other financial services. As of recently, they also rolled out their online-only lending division called Marcus.
This branch has been offering both savings and lending options for consumers all around the country. One of its most popular financial products is its “no fees” unsecured personal loan.
Marcus’ personal loan offers amount from $3,500 to $40,000 to borrowers. The APR is fixed for life and usually ranges between 6.99% to 19.99%. The better your creditworthiness rating is, the better term, rates, and loan amount you can get. This personal loan is for people who are in for the long haul, as the term available is between 36 to 72 months.
Since Marcus is relatively new to the lending scene, it currently doesn’t have any fees for lenders. This no-fees policy is a great strategy to sweeten the deal for potential borrowers. Besides, it is also a win-win situation because borrowers can save money throughout the life of their loans.
Take note: late payment can still affect your credit score.
The lenders offer a bit of convenience by providing a Marcus mobile app. Users can view the remaining balance of their debts, manage their payment options, or use the AutoPay option.
As of now, there is no late payment fee for this loan. But borrowers can skip a month after paying on time for 12 consecutive months.
As of now, the only options for loan customization are the following:
- Debt Consolidation
- Home Improvement Loan
- Wedding Loan
- Moving and Relocation Loan
- Vacation Loan
Requirements to Qualify for a Marcus Loan
Marcus only allows people who are 18 years old and up to take out a loan. Borrowers would also need a valid existing US bank account and either a Social Security Number or Individual Tax ID Number (ITIN.)
As for the creditworthiness requirement, Goldman Sachs doesn’t explicitly announce any credit score requirement. However, if you want to get the best from this loan, you must have at least a FICO score of 660 FICO score or higher.
- No fees for life: the borrower doesn’t have to worry about origination fees and later payment fees. The amount you loaned for is the amount that you will receive.
- AutoPay discount: Marcus gives a 0.25% APR discount for people who are enrolled in the AutoPay option.
- Skip a payment: borrowers who consecutively paid their dues on time for 12 months can skip one month without interest accrual.
- Direct payments to creditors: pay off up to 10 credit card debts and other personal loans directly to the creditor.
- Flexible payment options: choose term options between 36 to 72 months. Longer terms usually get higher rates due to increased risk.
- Online application process: the company uses soft credit and hard credit checks. All you have to do is check the lenders’ website and fill up the application form.
- No joint application: unfortunately, Marcus doesn’t have options for a common application.
- No secured loan options: borrowers cannot get a secured loan option to lower their rates.
- Limited customer support: no contact option from the app; customer support is only available via call (no chat tool or social media.)
- Long funding time: the funding is usually available after two days or more, unlike other lenders who offer next-day funding.
Recommended for Those with Good Credit
Marcus by Goldman Sachs is perfect for people who have a good to excellent credit score. This loan is also for people who prefer long-term installment loans with payment flexibility.
Additionally, people who need a high loan amount will also benefit from applying for this loan. But do note that you might not get the best deals unless you have excellent creditworthiness.
The loan is quite a good match for certain major expenditures like house renovation, weddings, and more. However, this option might not be suitable for educational loans. It is especially a good option for debt consolidation due to its fixed rate. Borrowers with a not-so-good score can still try to apply for this loan, but the approval rate can be pretty low.
LendingClub | Full Overview
LendingClub is currently one of the most popular online lenders in the country. On average, they give loans to people with at least a 600 credit score and a good debt-to-income ratio (at least 18%.) For context, a lower debt-to-income ratio is usually more favorable. Borrowers with at least 28% DTI can qualify for a mortgage.
Unlike Marcus, LendingClub is a peer-to-peer lending option, which can be very confusing for first-time borrowers. Before a borrower can take a loan, a prequalification process is needed. However, prequalifying gives the borrower an option to add a co-borrower. After qualifying, the loan will get funded by investors before it can start completely.
LendingClub also offers loans up to $40,000, but borrowers can get as low as $1,000. The co-op usually offers a fixed APR ranging from as low as 8.05% to 35.89%, depending on the user’s creditworthiness.
People who plan to get a loan from the co-op can check their rates on the official website. Loan terms can be as quick as 36 months to as long as 60 months.
Unfortunately, the fees can be pretty heavy if borrowing more enormous amounts. The origination fee ranges from 3% to 6% of the total loan amount.
In addition to this fee, there are fees for late payment (5% of the unpaid amount or $15). Payments are considered late if there is no payment after 15 days.
LendingClub currently offers its personal loans for the following purposes:
- Credit card Loans
- Debt consolidation loans
- Balance Transfer Loans
- Home Improvement Loans
- Major Purchases
- Home Buying
- Car Financing
- Green Loan
- Medical Expenses
Requirements to Qualify with Lending Club
To qualify for a loan, you need to be at least 18 years old and have a verifiable bank account. You must also be a US citizen or someone with a permanent residence in the country. People with long-term VISAs can also qualify for a loan.
Like Goldman Sachs’ Marcus, no credit score is explicitly stated as a requirement to get a loan with Lending Club. But the better your score is the better terms, loan amount, and rates are available for you.
You can check your current rate online by going to LendingClub’s official website and signing up for a form. Don’t forget to add your co-applicant for joint loans to improve your rates.
- Lower minimum credit score requirement: even people with less than perfect scores can qualify for the loan due to its low creditworthiness requirement.
- Lower loan amounts available: convenient for people who want to get long-term, smaller loan amounts.
- Joint loan options: co-signing and joint loans are available, which enables better rates and better terms.
- Direct payment to creditors: the loan can be directly paid to credit cards and other personal loans, which is a pretty convenient feature.
- Online soft credit check available: prequalify for a loan without affecting your credit score. LendingClub uses a soft credit pull for prequalification. It only does a hard credit pull once the loan is funded and issued.
- Offers free credit tools: their online tools can help debtors manage their payment options and other financial metrics such as credit score and debt-to-income ratio.
- Loan rates can be very high: the lowest rate available is still 8.05%, even for people who have great credit scores.
- Short loan period limit: LendingClub’s maximum term is only 60 months or five years.
- The origination fee is quite big: it can be as low as 3% to as high as 6%. The highest origination fee you can get is $2,400.
- No rewards for timely payment: unlike other lenders, LendingClub doesn’t incentivize timely payments with rewards like deferral payment.
Recommended for Those with Bad Credit
LendingClub’s personal loan offering is best for people with less than perfect credit scores (600 or more). Hence, it is an alternative option for those who failed to qualify for Goldman Sachs’ Marcus loan. This loan is also an excellent option if you don’t want a hard pull on your credit score, especially if you’re just looking around for available loans.
The most considerable edge of LendingClub against other lenders is its co-signed and joint loan options. This is partly because applying with another person will help the borrower get a bigger loan with lower savings.
However, LendingClub’s loan offerings might be better at getting a smaller loan than bigger ones. The minimum APR of 8.05% will be heavy on payments for long-term options. Especially if the payment is fixed for the rest of the loan’s life—read more here.
Marcus is clearly the better option if you want to get a longer loan with a fixed APR and a high loan amount. The convenient addition of a mobile app is another plus, especially for people who can’t go out at these trying times.
And compared to LendingClub, Marcus offers more rewards and incentives for their borrowers to make the loan a little bit cheaper (like AutoPay discount and deferral payment.)
However, it is noteworthy to mention that LendingClub also offers a great personal loan option. The lower credit score requirement is great for people who have a fair credit score and want to get a good loan. Additionally, the soft credit check is another thing that a lot of people might consider important.