How to Consolidate Your Debt with a Lending Club Loan

As the economy moves beyond the era known as the great recession, consumers are increasingly paying off their debt to get on a better financial footing. Many successfully use strategies such as the “debt snowball” to pay off debt. Debt repayment plans such as the debt snowball can successfully help people pay off debt. Debtors can also help their debt snowball gain traction faster by reducing the interest rates they pay on their loans via a refinance.

There are several person to person loan brokerages, such as Lending Club and Prosper, that allow you the consumer to borrow money from other individuals at a much lower rate than you would be able to get form a bank. Typically, banks are charging anywhere between 15% and 30% on credit card balances in today’s economy. With a peer-to-peer loan, you can lower that interest rate to as low as 8% if you have excellent credit. Typically borrowers will pay between 8% and 16% on loans through Lending Club and Prosper.

The personal loans that you get through one of these companies will have a fixed interest rate and be paid off over a period of 3 years or 36 payments. Since the rate and term are fixed, there will be no surprise interest rate hikes or changes in your borrower’s agreement that requires you to suddenly start making a much larger payment.

When considering doing a consolidation through Lending Club or Prosper, you have to make sure that it will be a good deal for you at the end of the day. You will certainly compare interest rates on your credit card and likely be able to get a better deal from a peer-to-peer lending institution, but you also have to consider any fees that would be charged by the peer-to-peer lender. Typically, these companies will charge borrow a 1-3% origination fee for making the loan. More often than not the math works out that the peer-to-peer loan is a better deal, but there are a few instances when it would be better to simply pay off your credit card.

In order to get started with consolidating your high-interest credit card debt through Lending Club, head on over to their websites and fill out an application. After you apply and are approved by the company, lenders will have a period of 2 weeks where they can fill the dollar amount for the loan. After the loan has been filled, you will be cut a check for the balance of your loan and your payments will begin the following month.

If you’re tired of being messed around with by your bank, consider a peer-to-peer lending site such as Prosper or Lending Club to get a better rate.