How to Refinance a LendingClub Personal Loan to Save Money

Refinancing a personal loan from LendingClub can potentially help you lower your interest rate, reduce your monthly payments, or pay off your debt faster. In this comprehensive guide, I’ll explain when and how to refinance a LendingClub personal loan to save money.

What Does It Mean to Refinance a LendingClub Personal Loan?

Refinancing a loan simply means taking out a new loan to pay off an existing one. When you refinance a LendingClub loan, you get approved for a new personal loan from a different lender, receive the funds, and then use that money to pay off your LendingClub debt.

The goal is to qualify for more favorable loan terms that allow you to:

• Lower your interest rate to reduce the total cost of borrowing
• Extend your repayment term to lower your monthly payments
• Shorten your repayment term so you can pay off the loan faster

You don’t technically take on new debt when you refinance a loan. You simply shift what you owe from LendingClub to a new lender that offers better rates or terms.

When Does It Make Sense to Refinance a LendingClub Personal Loan?

There are a few scenarios where refinancing your LendingClub loan could make good financial sense:

1. Your Credit Score Has Improved

The interest rate and terms you qualify for on a personal loan depends largely on your creditworthiness. If your credit score, income, or debt-to-income ratio has improved since you first took out your LendingClub loan, you may now qualify for lower interest rates from other lenders.

Even a small increase of 20-30 points in your credit score could lower your rate by a few percentage points, saving you hundreds or thousands of dollars in interest charges.

2. Interest Rates Have Dropped

Interest rates fluctuate over time based on economic conditions and the competitiveness of the lending market So even if your personal financial situation is exactly the same, you may be able to get a lower rate today than when you first took out your LendingClub loan

It’s worth checking current rates to see if you can save money by refinancing.

3. You Want More Predictable Payments

LendingClub offers both fixed and variable rate loans. If you currently have a variable rate loan refinancing into a fixed rate loan can provide stability by locking in your interest rate. This protects you from potential rate hikes in the future.

4. You Can Afford Higher Monthly Payments

If your income has increased enough to be able to afford higher monthly payments, refinancing your LendingClub loan into a shorter-term loan could help you:

• Pay off your debt faster
• Reduce the total interest you pay overall

Even though your monthly payments will be higher, you’ll save money in the long run by minimizing interest charges.

5. You Need Lower Monthly Payments

On the other hand, if your financial situation has changed and you’re having trouble affording your current monthly payments, refinancing into a longer-term loan can reduce your payments.

Extending your repayment term means you’ll likely pay more interest over the life of the loan. But it could be the right move if you need some breathing room in your monthly budget.

How to Refinance a LendingClub Personal Loan in 5 Steps

If you’ve decided refinancing your LendingClub loan makes sense, follow these steps:

1. Check Your Credit Score

Checking your credit score helps give you an idea of what interest rates you may qualify for. Excellent credit (scores above 750) will get you the best rates when refinancing debt.

2. Shop Around and Compare Loan Offers

Compare offers from multiple lenders to find the best deal. Look for the lowest interest rate and fees. Avoid lenders that charge prepayment penalties.

3. Apply for the New Personal Loan

Submit a loan application with the lender offering the best terms. Provide personal info like your name, address, income, and employment.

4. Receive the Funds

Approval only takes a few minutes. Once approved, it takes about 5 business days to receive the loan funds, either by check or direct deposit.

5. Pay Off Your LendingClub Loan

Use the proceeds from your new loan to pay off your existing LendingClub debt. Make the payment as soon as possible to avoid accruing additional interest.

Pros and Cons of Refinancing a LendingClub Personal Loan

When Should You Refinance a LendingClub Personal Loan?

While you can refinance a personal loan any time, the best times to refinance a LendingClub loan are when:

• Your credit score has improved significantly
• Current interest rates are at least 2% lower than your existing rate
• You can realistically afford higher monthly payments
• You get loan offers without prepayment penalties

Waiting to refinance generally makes the most sense when:

• Your credit is the same or worse than when you got the original loan
• Interest rates are about the same or slightly higher
• The new loan has hefty prepayment penalties or fees
• You would struggle to afford the new monthly payments

Alternatives to Refinancing a LendingClub Personal Loan

If refinancing your LendingClub debt doesn’t make sense right now, here are a couple alternatives to consider:

• Pay extra each month – Making an extra payment towards your principal every month will help you pay off the loan faster and reduce interest paid. Even an extra $20 or $50 can make a difference.

• Use a balance transfer card – Transferring your LendingClub balance to a 0% APR balance transfer credit card could allow you to pay off the debt without accruing new interest charges, but only if you pay it off in full before the intro 0% rate expires.

• Renegotiate with LendingClub – Contact LendingClub directly to inquire if they can modify your existing loan terms, like reducing your interest rate. This avoids fees and credit checks associated with refinancing.

• Debt management plan – Enrolling in a DMP through a non-profit credit counseling agency may help you get lower interest rates and consolidated monthly payments.

Tips for Refinancing a LendingClub Personal Loan

If you decide refinancing your LendingClub loan is the right move, keep these tips in mind:

• Check rates from multiple lenders to compare offers
• Prioritize lenders that don’t charge origination or prepayment fees
• Be cautious of extending your repayment term too long
• Have a plan to pay off the new loan as fast as possible
• Double check the loan agreement and terms before signing
• Time it right based on your credit score and interest rates
• Continue making payments on your LendingClub loan until the new one pays it off

With the right approach, refinancing your LendingClub personal loan can be a savvy financial move that saves you money on interest and helps you pay off debt faster. Just be sure to compare all your options to find the best loan for your needs.