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Is Lending Club a Good Loan Provider for Freelancers?

Thursday, November 3, 2016 17:28
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Is Lending Club a Good Loan Provider For Freelancers?

During the past decade, dozens of financial options have materialized all over the web and mobile spheres. Today you can get tens of thousands of dollars financed for many different purposes, without having to leave your seat at the coffee shop. It’s easier than ever before to get money, but lots of people are wondering if this situation is too good to be true. We’ve all heard about new virtual lenders like Lending Club, but it takes a strong Lending Club review to figure out if this is actually a good option. The review linked above is very thorough; we’ll abbreviate some of the key points below.

If you are a freelancer, chances are your business costs are not terribly high, but you probably don’t have a huge income either. It can be necessary for freelancers to borrow money in order to take their business to the next level, whether to get a good website, get new software to better serve their customers, or to relocate to a market with more and better clientele.

Lending Club is now an obvious choice for new borrowers. You can apply for a Lending Club loan from your desktop, and the money can be in your account in just a few days. This is a great option for people who need money very quickly, or who aren’t able to get loans from another source. But the ideal Lending Club customer is a smaller demographic than you might think: someone with a great personal credit history without access to loans from traditional lenders. Interestingly enough, this may describe a lot of freelancers out there.

Personal credit health is based on two main factors: time and loan repayment. On the one hand, a good credit history will be one that has been active for many years. Credit reporting agencies can’t be sure that you are responsible with borrowed money unless you have more than a couple of years of behavior recorded in your credit history. The other factor is how you use and repay the money that you borrow. If you have a bunch of credit cards, each with high balances carried on them, it looks like you are living on borrowed money and are somewhat likely to default on any future loan. This will lower your credit score and drive up your interest and fees from any potential lender. If this is you, it’s important to take the time to improve your credit score.

Only people with good credit scores should apply for Lending Club loans. The interest rate on a Lending Club loan can be anywhere from 5.99% all the way to around a mind-boggling 35%. The latter is way too high for anyone except people who will somehow be able to pay off their loan very quickly – preferably in just a few months. Therefore, consider a Lending Club loan only if you have an excellent credit score, or if you will be able to pay off the loan much earlier than the term described on the loan (there will not be any penalty for doing so). Many freelancers fit this bill. They may not have long credit histories, but they often have the hope of steady and growing income, perfect for paying a loan off early. Lending Club may be the most efficient lending source for these customers, especially if fast loan fulfillment is needed and the freelancer’s bank doesn’t offer better rates. 

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