LendingClub Auto Refinance Review
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Refinancing an auto loan involves replacing your existing loan with a new one, which might be a good move, particularly if your financial situation has changed. You may be able to reduce your interest rate, lower your monthly payments or land more favorable terms.
If you think refinancing is right for you, LendingClub is one lender that offers direct auto refinance loans. In this article, we discuss the company, its offerings, how to apply and who may benefit from an auto loan from LendingClub.
Headquartered in San Francisco, LendingClub is perhaps best known as a peer-to-peer, online lending platform for personal loans. It also offers business loans. Although you can’t obtain a new auto loan from LendingClub, the lender may help you refinance an existing one.
LendingClub says it gives offers in minutes following an easy and fast application process that requires no origination fees or prepayment penalties should you decide to pay the loan off faster. But the Federal Trade Commission filed a complaint against the lender last year, accusing it of deceptive practices, including stringing customers along who never received approved loans.
Refinancing with LendingClub, at a glance
You could save money by refinancing with LendingClub, particularly if you have good credit or increased your credit score since taking out your original car loan. Its customers save $3,000, on average, when they refinance, according to the lender.
If your financial situation has changed for the worse, you could extend your loan, thereby potentially lowering your monthly payments. In general, a long-term auto loan is risky — you could end up “underwater” with your car, owing more than it is worth.
You must meet several criteria to refinance with LendingClub including:
- Your vehicle model must be less than 10 years old and have fewer than 120,000 miles. Also, it must be driven for personal use rather than for business purposes.
- Your current loan should have a balance between $5,000 and $55,000. In addition, your current loan must have been initiated at least one month ago and have at least 24 months of remaining payments.
Rates on auto loans through LendingClub range from 3.99% APR to 24.99% APR and depend on credit score, credit history and percentage of total outstanding debt in relation to income.
LendingClub isn’t your only option for refinancing your auto loan. By shopping around and comparing rates from multiple lenders , you can find the best offer for you, possibly saving hundreds or even thousands of dollars over the life of your loan. We found lower rates at credit unions — check with your own credit union, bank or online lender. It may also be possible to refinance with your current lender. You could also fill out an online form on LendingTree and receive up to five refinance offers from up to five different lenders, based on your creditworthiness.
How to apply
To apply for auto refinancing with LendingClub, simply click the “Check Your Rate” button on its auto refinancing page and select your state. Once you do, you’ll be asked about your goal for auto refinancing. Do you hope to lower your interest rate, lower your monthly payment or are you just shopping around and curious about what you qualify for?
To refinance an auto loan with LendingClub, you’ll have to go through these three steps:
- Check your rate: You’ll provide LendingClub with some basic information about yourself and your vehicle. You won’t have to provide your Social Security number or specific details about your current loan. Once you fill out the quick pre-qualification form, you’ll be instantly presented with one to two offers. This “soft” pull won’t affect your credit.
- Confirm your details: Once you select the offer that appeals most to you, you’ll complete an online application. During this step, you’ll need to provide additional documents and details about you and your car such as a driver’s license, proof of insurance and proof of registration that can easily be submitted from your mobile phone. You’ll complete the process after you’ve signed your loan documents. The “hard” credit pull that results may ding your credit slightly, but may be worth it if you can receive a better interest rate on your auto loan.
- Drive off with savings: LendingClub will pay off your previous lender if your loan is approved, and your auto refinance will be good to go.
The fine print
If you’re interested in auto refinancing through LendingClub, you must be at least 18 years old, a U.S. citizen, permanent resident or living in the U.S. on a valid, long-term visa. You’ll also need to live in one of the 35 states LendingClub auto refinancing currently services including:
Alabama, Louisiana, Oklahoma, Arizona, Maryland, Oregon, Arkansas, Michigan, Pennsylvania, California, Minnesota, Rhode Island, Delaware, Missouri, South Carolina, Florida, Montana, South Dakota, Georgia, Nebraska, Tennessee, Idaho, New Jersey, Texas, Illinois, New Mexico, Utah, Indiana, New York, Washington, Kansas, North Carolina, Wisconsin, Kentucky and Ohio.
You may also be required to pay your state’s fee to transfer your title from the previous lender to LendingClub and/or late fees and other charges if you fail to make your monthly loan payments on time.
In addition, LendingClub does not refinance ATVs, RVs, motorcycles, commercial vehicles, salvaged vehicles or the following makes, models or types:
- Chevrolet Express G-Series van
- Cross Lander
- Nissan Leaf
- Diesel Volkswagens
Pros and cons of refinancing through LendingClub
Here’s a brief overview of the highlights and lowlights of refinancing through LendingClub:
Highlights of LendingClub refinancing
- No fees: LendingClub auto refinancing comes with no application, origination or prepayment fees.
- Competitive rates: With APRs as low as 3.99% you may be able to get a lower rate on your auto loan.
- Soft credit pull: You won’t need to provide a Social Security number to get multiple auto refinancing offers during LendingClub’s pre-qualification process.
- The opportunity to extend an auto loan: If your goal is to secure a lower car payment, you may be able to extend the term of your loan and enjoy extra cash in your pocket every month. The potential downside is that a long-term auto loan could eventually put you underwater on your car, owing more than it is worth.
Lowlights of LendingClub refinancing
- Not available in all states: As of March 2019, LendingClub’s auto refinancing is currently only available in 35 states.
- Restrictions on vehicles: All vehicle brands do not qualify for LendingClub refinancing. Plus, ATVs, RVs, motorcycles, commercial vehicles and salvaged vehicles are ineligible for auto refinancing through LendingClub.
- Refinancing may take some time: Refinancing depends on the accuracy and thoroughness of the documents you submit and may take up to 15 business days.
- May be difficult to receive information or answers to questions: To contact LendingClub about auto refinancing, you’ll need to call during regular business hours or send an email. There is no online chat feature you can use if you have questions.
- Refinancing luxury vehicles may not be an option: Since LendingClub places a $55,000 cap on loans, luxury vehicles that exceed $55,000 may not be eligible for refinancing.
The bottom line: Who is LendingClub best for?
LendingClub has options for borrowers who have improved their financial situation since taking out an auto loan as well as longer terms for those who are struggling to pay their car note. No matter your situation, it’s best to weigh the benefits — or drawbacks — of refinancing.
You may be a good fit for LendingClub auto refinancing if you:
- Would like to check what types of offers you qualify for without a hard credit check, which may lower your credit score.
- Are interested in a faster application process than you may experience at a brick-and-mortar lender.
- Have a high credit score, low percentage of total outstanding debt in relation to your income and a successful credit history that may qualify you for the lowest APR, one that is lower than your current rate.
You may not be a good fit for LendingClub auto refinancing if you:
- Have a poor credit score and therefore may not qualify for a lower APR.
- Hope to refinance an ATV, RV, motorcycle, commercial vehicle or salvaged vehicle — these are all on LendingClub’s list of restricted vehicles.
- Are in need of a new car purchase loan — LendingClub only offers auto refinance loans.
- Are seeking a shorter term than your current one — LendingClub only matches the length of your current loan term or extends it.