Payday loans are a risky business. With an average interest rate of 400% blasting the budget, once you’ve taken out a payday loan, it’s hard to get out of it.
But there are times when you might not have another option. So if these loans are a necessary last resort for some, are there responsible versions?
LendUp online lenders would say yes. While interest rates are within the typical range of payday loans, the company touts its “LendUp Ladder” practices that help clients navigate their way to better rates.
LendUp is an option of last resort for borrowers without strong credit who are looking for a smaller loan ($ 100 to $ 1,000) and can afford to pay it off on time, avoiding the company’s exorbitant APRs.
Here’s how LendUp works, along with information from other LendUp journals, including details on the company’s past legal issues.
LendUp review: the basics
So, what exactly is LendUp? Describing itself as a “socially responsible lender,” LendUp offers short-term credit to those who may not be approved for prime financial products. The company has made 6.4 million loans with a combined value of over $ 2 billion since its inception in 2011.
While not much different from traditional payday lenders, LendUp sets itself apart by offering clients ways to improve their financial situation as well.
- LendUp offers payment extensions and modified repayment plans on single-payment loans to help borrowers who can’t pay it all off at once.
- The LendUp Ladder helps borrowers earn points to become eligible for installment loans, better rates, and payment reports from credit bureaus.
- Borrowers can earn these points by paying off their loans on time, taking online financial education classes through LendUp, and submitting a testimonial video.
LendUp specializes in short-term credit but offers it in different ways. You can use LendUp to get a lump sum loan or, after installment, an installment loan.
|Maximum loan amounts|
|Single payment loan||Installment loan|
|● $ 255 (when borrowing in California)
● $ 300 (Louisiana, Mississippi, Missouri, Tennessee, Texas, and Wisconsin)
|● $ 400 (California, Louisiana, Texas, and Missouri)|
|As of September 4, 2020|
Payment schedules and reimbursement protections also vary from state to state.
As mentioned above, LendUp offers courses to help its borrowers earn points to move up the ranks to better interest rates and reports to your credit bureau, which can help you build your credit score. The LendUp educational platform offers a variety of videos, with topics such as:
What we love about LendUp
Now let’s move on to the focal point of any LendUp review: the pros and cons of borrowing from it. We will start with the good sides …
As low as $ 100 available for next-day financing
The general appeal of payday loans is quick and accessible financing. LendUp is offering on this front, with microloans as low as $ 100.
If you are approved for a LendUp loan, you could receive the funds deposited into your bank account as early as the next business day. As of September 4, 2020, the features previously offered by the company (15-minute and same-day transfers) were not available.
The other major plus point of LendUp loans is their flexibility if you are not able to pay off your debt on time.
Repayment extensions, plans
If you’re struggling to pay off a one-time loan on time, you can extend the term of your loan or enter into a payment plan. Your options will vary depending on your state of residence.
If you are a Louisiana single-payment loan borrower, for example, you have the right to request a new payment plan (as long as you do so before your original due date).
You can also have peace of mind knowing that adjusting your repayment schedule (or even making a late payment) won’t negatively impact your credit score. This is because single-payment loans are not reported to credit bureaus.
That said, repayment options are lacking for LendUp installment loans, and credit reports could be at stake, depending on the laws in your state.
Things to keep in mind about LendUp
LendUp loans may not be as accessible as advertised, especially if you don’t have an active social security number and checking account. Both are loan terms.
LendUp is also not an ideal option for the following reasons.
LendUp only lends in seven states.
LendUp is not available in the United States. Below are the states in which LendUp is currently operating:
|Single installment loans and installment loans||Single payment loans only|
Payday loan-type fees and interest rates
The fees that LendUp may charge vary by state. For single payment loans in Mississippi, for example, fees currently range from $ 19.50 to $ 58.50 per loan up to a maximum of 20% of the amount borrowed.
Fee amounts and limits for installment loans also vary by state. There are also fees in some states for:
- Make a loan repayment with a debit card
- A returned check if your account is low on funds
These fees do not include interest rates, which also vary depending on the type of loan and the state in which you are borrowing. Like payday loans, interest rates run into the hundreds and thousands (Wisconsin recorded a high of 1,016.79% as of September 4, 2020), which is paltry compared to single and double-digit rates. Typically charged on personal loans and other debt products.
For its part, LendUp says its borrowers saved $ 150 million in interest and fees on their products.
You can check LendUp’s Rates and Notices page to see what type of rate you might get in your state.
This may not be the most effective way to improve your credit.
If you’ve come to LendUp’s website thinking the business could be a stepping stone to better credit, you might be disappointed.
Successfully repaid single-payment loans are not reported to the credit bureaus. And while you can climb the LendUp ladder and borrow larger loans at lower rates, not all states allow credit reports for them either.
If you’re looking to borrow, you might want to consider potentially cheaper ways to accumulate credit, including taking out a secured credit card or becoming an authorized user on a family member’s card.
Before choosing a credit-building tool, weigh the pros and cons to make sure it helps, not hurts, your financial future.
LendUp reviews are mixed.
LendUp has an online platform from which you can manage your loans. This is where you can download application documents, such as proof of income, check the status of your application, and make payments.
LendUp does not charge money upfront – if you receive an interaction you are unsure of, call LendUp at 1-855-2LENDUP or send an email [email protected].
Although LendUp describes itself as a socially responsible lender, LendUp’s customer service reviews indicate that there is significant room for improvement.
- The company lost its Better Business Bureau accreditation
- In 2016, the Consumer Financial Protection Bureau (CFPB) ordered LendUp to pay $ 3.63 million for various breaches
- And like most lenders, it has had mixed reviews online.
As for CFPB action, Sasha Orloff, then CEO of LendUp, said in an interview with TechCrunch in 2016 that the violations stemmed from “legacy issues that mostly date back to our early days as a company.” … At that time, we did not have a fully built compliance department. We should have.”
Decide if LendUp products are right for you.
While LendUp appears to be more transparent than shady payday lenders, it is clear that there can be risks – some of the same risks that exist with many payday lenders, such as astronomical fees and APRs.
However, not all LendUp reviews are negative. The company offers the option of extending your single-payment loan without getting into more debt due to excessive fees. And if you work to collect points and move up the LendUp ranks, you may be able to break free from initially (very) high-interest rates and start improving your credit history.
If you see LendUp as a tool for creating credit, consider the much lower interest option of a secured credit card instead. And if your credit score is high enough to give you access to traditional personal loans rather than payday loans, it could be a much easier and more transparent process for you.
André Pentis contributed to this report.