LendEDU Rating (3.67 / 5.0)
For Below Average Credit
- LendUp Personal Loan
- Product Information 3.0 / 5.0)
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- Application Process (3.6 / 5.0)
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- Post Application (4.4 / 5.0)
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LendUp is a company that offers an alternative to payday loans. In an industry that usually brings to mind the image of check cashing stores in bad areas of town, LendUp is an online startup that is hoping to shake up the payday loans business.
With a lot of potential customers, LendUp advertises itself as a way for people with subprime credit to qualify for loans when banks turn them down. They specifically target their services toward those who have FICO scores below 720. That’s over half of the US population or roughly 150 million people.
Benefits of LendUp
What’s different about LendUp isn’t just that they’ve moved away from the payday loans storefront and gone online. They claim to be the only check cashing company to have a relationship with the major credit bureaus. This can allow their clients to improve their credit history and borrow more money at better rates as they take out and repay their LendUp loans on time.
One of the statistics LendUp cites on their website is that the Credit Builders Alliance claims those with low credit scores will pay over $250,000 more in interest over the course of their life. That includes interest on loans, credit cards, and mortgages. For this reason, LendUp suggests their services are essential since their loans help their clients build credit. However, only their installment loans are reported to credit bureaus C not their typical short-term loans.
Aside from just helping their clients build credit, LendUp also claims to provide more flexibility in their repayment terms. Unlike other payday lenders, they don’t rollover your loans if you’re not able to pay it back on time. Most payday lenders will charge you a fee after they rollover your loan, but LendUp offers a free 30-day extension.
Most payday lenders have physical locations and require you to go there in person to apply for a loan. Having the opportunity to borrow money online could be easier for people seeking payday loans who have access to smartphones or computers. LendUp has a website that is well organized, and applying for a loan can take as little as five minutes. To apply for a loan, all you need is your personal information, banking information, and proof of income.
After you’ve applied, they tend to approve loan applications quite quickly, allowing you to get an answer as to whether or not they’ll be able to help you within a short period of time. While next day funding is their standard, they also offer instant funding and same day funding, but you’ll have to pay extra for those options.
Repayment is simple. They automatically take the payment out of your checking account or allow you to pay by check debit or MoneyGram. If you don’t have the money, you can contact them prior to the date and ask for an extension. You can also repay your loan early.
Another benefit of LendUp is that they offer more transparency by clearly laying out the terms of the contract so the average person can understand them. They also allow for borrowers to make some choices related to the terms that they want C such as how much they would like to borrow and for how long they would like to borrow it.
The amount they charge in interest is competitive within the payday loan industry, but that means you’ll still be paying a significant amount of money on your loan C expect APRs above the 200% range. That works out to around $200 or more per $100 borrowed.
Drawbacks of LendUp
As far as payday loans go, LendUp is an interesting Innovation and likely one of the better options within the sector. There have been some complaints against LendUp to the Consumer Financial Protection Bureau, which are related primarily to misleading advertisements and its claims that using the service would help build credit.
LendUp also likes to boast that it doesn’t have hidden fees, but there are some fees that you’ll find in the fine print. You will pay a late fee if you have insufficient funds in your account when they debit your loan payment, which is around $15. There is also the question of whether many customers of typical payday loan companies will be able to access LendUp online as some might not have reliable internet access.
Before taking out a LendUp loan, it’s important for a borrower to question whether payday loans are the right option for them in the first place. One of the negatives of any type of payday loan is that the interest rates charged on them are often exponentially higher than what you would pay anywhere else.
If you have low credit or no credit then you might think that LendUp is a great solution for you. If you need money quickly in an emergency C it could be. But if you’re drawn in by LendUp’s promise to help you build credit, LendUp is probably not the way for you to accomplish that.
Even within their own platform, it can take a while and a number of small loans to get you to their Platinum or Prime status, which would allow you to qualify for their best rates and the ability to borrow more. But the amount of interest that you’ll be charged in the process would be significant. There are much cheaper ways to build your credit.
A better choice would be to apply for a secured credit card. With a secured card, you put down a deposit in order to get approved. That deposit provides security to the credit company and allows you to build your credit and, over time, potentially upgrade your card to a regular credit card. In this scenario, you would already have a relationship with a credit card company, so upgrading could be easier.
A secured credit card would also cost you significantly less in interest C especially if you pay it back in full each month in order to avoid interest charges. Even if you carry a balance, the interest rate charged on a secured card would be significantly less than LendUp would charge you. An alternative to secured cards would be a department store credit card since they often approve people with lower credit scores.
Another drawback to LendUp is that they don’t operate in very many states.
Bottom Line
Ultimately, LendUp is better than most lenders in its category, but it’s still a payday loan. If you need money in an emergency, it could be the right option for you and might help your credit score if you take out a few installment loans from them. But borrowing from LendUp is not a cost-effective way to increase your credit score and it’s hard to know how much of a boost it would provide. If available, you may be better off using cheaper and more effective alternatives to building credit such as secured credit cards or low-interest personal loans.
