LendUp Reviews – Is LendUp Legit & Safe for a Loan? What You Need to Know About Sites Like Lendup
Consumer debt is a growing problem in America. Many of us are living on borrowed money which is to live on borrowed time. The numbers support this fact. A 2014 study conducted by the Urban Institute raised some alarming statistics.
A random sample of 7 million people yielded this cold truth: “Roughly 77 million Americans, or 35 percent of adults with a credit file, have a report of debt in collections.”
According to LendUp Loans, “they were launched to help these 77 million Americans. Our mission is to provide anyone with a path to better financial health.”
The median debt identified in the study was $1,350. This is not an insignificant amount for any household; however, those who accrue credit card debt are struggling to pay it. As a result, credit scores fall, and the ability to obtain future credit dissolves. The result is a fast descent.
In our LendUp review, we’ll look at how the company works to serve borrowers with a damaged credit history.
To better understand sites like LendUp, we need to look at what services it offers. LendUp Loans offers customers two basic services, all with various moving parts:
- Short-term loans
- Longer-term loans
People considering the service must be cognizant of LendUp reviews. Examining the experience of previous users is the best way to assess the value of the service while answering questions like, “Is LendUp legit?” and “Are LendUp loans simply LendUp payday loans?”
Understanding Short-Term LendUp Loans
A LendUp review illustrates a clear picture of the circumstances of borrowers: they are desperate. The loans are for low amounts and can be executed fast. LendUp loans promise to transfer as quickly as in 15 minutes.
The short-term LendUp loans allow you to select two attributes:
- Amount: $100–$250
- Duration: 7–30 days
The value being offered here is speed and disregard for poor credit history. However, does this rapid-fire lending really meet emergency needs? A survey reported by Fortune explains that, “Most Americans (63%) may not have enough money in savings to cover an unexpected $500 car repair or a $1,000 hospital emergency room visit.” This may leave some questioning the value of a maximum, short-term loan value of only $250.
Image source: Pixabay
LendUp personal loans resemble typical “payday loans,” where a short-term, unsecured loan is repaid upon the borrower’s next payday. The short-term borrowing here, however, is not a “LendUp payday loan,” according to the site.
LendUp personal loans are different. LendUp Loans explains: “Unlike payday loans, our interest decreases to under 30% APR as you demonstrate financial responsibility.” Yet, the immediate fact remains clear: you will pay enormous interest rates. We’ll look at this more in depth later in the article.
Understanding Long-Term LendUp Loans
Those with greater capital needs can choose the LendUp loan that offers a greater maximum. Borrowers have access to up to $1,000 in loans, which can be repaid over a 12-month period. This process doesn’t offer the expediency of the short-term option. However, you’ll have the option to repay in installments.
Additionally, your repayment history will be reported to all three major credit bureaus. The intent here is to allow the borrower to demonstrate good credit practices. A longer time horizon and smaller payments make this feasible for those lacking in credit management skills.
With the long-term option, LendUp reviews candidates a little more carefully. For example, LendUp reviews the applicant’s FICO score and has additional metrics embedded in its own algorithm. This information is used in the LendUp review process in determining if a candidate will be extended a loan.
Future Borrowing with LendUp Loan Points
Much of the empowering LendUp ethos is represented in what it calls the “LendUp ladder.” This is a scale which borrowers can ascend by earning points. Points are awarded to users who borrow from LendUp and make timely repayments. Customers can also earn points by watching the educational video content on the site. These free courses cover several topics, including:
- Better Budgeting
- The True Cost of Credit
- What’s up with Your Finance Charges
- Know Your Credit Rights
It should be noted that these points also act as an extended marketing tool for the LendUp loans. When a participant successfully refers a friend, 500 points are given. This acts in a similar fashion to encourage users to provide positive LendUp reviews.
This ladder system allows borrowers to earn access to annual percentage rates (APR) as low as 29%. As one earns more points, the individual graduates to higher tiers. These
stratifications are silver, gold, platinum, and, finally, prime.
However, the reduced interest rate at a higher tier is also a function of the term. That is, a lower rate is the result of a longer repayment period. A higher rate means greater borrowing power. This appears to be designed to avoid the moniker of “LendUp payday loans.”
Buyer Beware: LendUp Loan Costs
The speed and ease of a LendUp loan will come at a significant cost. Without a firm understanding and LendUp review, customers can find themselves in a much worse situation.
As established above, the lowest possible rate one can obtain is 29%. This comes only after a customer has engaged in a LendUp loan and proven his/her responsibility. Before borrowing from LendUp, review how these costs will impact your bottom line.
Consider how these high APR figures compare with other national averages. Government-sponsored mortgage corporation Freddie Mac reports the 2015 national average 30-year mortgage rate to be 3.85%. Researcher HSH places recent average automobile loans at 4.07%.
How does this compare with credit card borrowing? The current national average APR stands at 15.18% – still well below the floor of the 29% offered to prime LendUp loan customers. You are paying for a quick, small infusion of cash when others will not approve your credit. A standard LendUp loan customer scenario may resemble this:
Jim needs $250 to meet a water bill in danger of being shut off. He’ll get paid in a week and needs only 7 days to repay his LendUp loan:
- Loan: $250
- Duration: 7 Days
- Total interest: $37.10
- APR: 773.80%
If the need is immediate and no other source is available, the LendUp loan comes at an enormous APR. Again, a LendUp loan could sometime be better described as a LendUp payday loan.
The Court of Public Opinion: LendUp Reviews
Reporting site Credit Karma shows an average 3.3 stars out of 5 from 429 users. Interestingly, the feedback is polarized. A high concentration of five-star reviews (206) contrasts a similar density (139 reviews) of one-star reviews.
A deeper dive into LendUp.com reviews from customers yields insight. The majority of negative reviews come from these complaints:
- Failure to gain approval for a loan
- Poor customer service
- Considered service as no more than a glorified payday loan
On the positive end, customers report:
- Fast transactions
- Flexibility on poor credit history
- Upward mobility to lower rates
LendUp reviews offer a greater view of the logistics involved. Many customers input their information, set up a bank account, and are ready to borrow. Customers must be at least 18 and residing legally in the US. All a borrower needs is an active checking account, a valid email address, and a phone number. Basic personal information, including your Social Security number, is required. Income and employment status are also required.
In one LendUp review posted to customer advocacy site HighYa, a dissatisfied customer writes, “I should be at prime level with the points I have and when I messaged them they said platinum and prime wasn’t offered in my state but they were working on it.” This underscores another point of diligence for the borrower. LendUp loans are not available in all states. Today, 23 states permit a LendUp loan. LendUp.com reviews from those extended loans are largely positive.
Another LendUp review confirms the brevity of the process: “This site is completely legitimate and the money is there when they say it will be.” If potential customers educate themselves prior to borrowing, there will be no surprises.
In fact, LendUp personal loans prides itself on this transparency with costs. In addressing this, LendUp explains this scenario to make its fees clear, “If you borrow $100 for 30 days from LendUp, you pay a total of $17, or 17%, in fees…no LendUp borrower could ever owe anything more than the original $17, because the loan is only for 30 days, and we don’t allow rollovers.” LendUp reviews its costs structure carefully on the site.
While the interest rate is clear with every loan, there are extra service fees and penalties to consider. They include:
- $50 “administrative fee” or 5% of the loan value (whichever is less)
- $15 non-sufficient funds fee if payment is returned unpaid (a one-time fee)
- $15 late fee assessed when a payment is made later than 15 days from due date
Keep these in mind if you think they’ll apply to your circumstances. These can add to the already considerable APR.
How Does LendUp Review a Customer Application?
LendUp reviews a variety of sources upon reviewing an application. It will assess your background using “traditional credit bureaus, non-traditional credit bureaus, and public records.” Personal information (address, etc.) is also verified. There is no formal credit score that deems a customer viable. LendUp reviews a constellation of metrics. These data points are FCRA-compliant but perhaps not completely visible to the applicant.
LendUp reviews customers also based on information from Clarity Services and LexisNexis Risk Solutions Consumer Center. Often, a credit check adversely impacts a credit score. However, if the borrower is able to provide proof of income, LendUp reviews will be limited to these other sources. In this case, there is no direct credit check, and scores aren’t influenced.
Is LendUp Legit?
The company doesn’t seek to fool customers. The concept, costs, and fees are clearly defined on the site. All evidence strongly suggests that LendUp loans adhere to the strict lending laws within the states it operates.
Image source: Pixabay
There is no brick-and-mortar store. The company exists only as an online entity founded in 2011. The address of the headquarters is in San Francisco. The startup funding has come from various venture capital sources, including Victory Park Capital, Susa Ventures, and Google Ventures.
LendUp has warned consumers about scammers posing as LendUp employees. This LendUp scam has likely, negatively and unfairly, impacted a legitimate business. The astronomical APR figures are certainly no better than traditional payday loans. The site only offers a system for improving credit after a customer has borrowed at these high-interest rates.
Borrowers may also wish to investigate LendUp competitors like Avant. This is a more suitable option for those in need of loans that exceed the $1,000 maximum offered by LendUp. Avant has similar extra fees penalizing late payments and non-sufficient funds. Avant will leverage similar resources to ascertain your credit history before extending a loan.
Sites like LendUp, including OnDeck, also offer quick loan solutions. However, OnDeck is built for business loans rather than personal ones. Kabbage is also in this family.
Final Verdict on LendUp Loans
LendUp personal loans offer some value, but not much. The money will come quick and without much penalty for poor credit. However, the downside is significant:
- High APR
- Low-dollar loans
- Maximum borrowing of $1,000
- Lower APR only offered after significant interest is paid on initial loans
- Slow, expensive, and mild positive impact on your credit score
The notion of a LendUp scam is largely unfounded. Those in need of money fast should exhaust all other options before resorting to LendUp payday loans which offer only a nominal benefit above traditional payday loans.
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