Lending Club origination fees can be a bit confusing, but understanding them is key to making informed decisions about borrowing or investing.
The origination fee is a percentage of the loan amount that's deducted before the borrower receives their funds. For example, if you borrow $10,000 with a 5% origination fee, you'll actually receive $9,500.
This fee is charged by Lending Club to cover their costs of originating the loan, such as verifying the borrower's creditworthiness and processing the loan application.
Worth a look: Amortizing Loan Origination Fees
LendingClub Fees Controversy
LendingClub's advertising often promises "no hidden fees", but the company actually charges an origination fee that's deducted from the loan amount.
The FTC complaint alleges that LendingClub obscures this origination fee, making it difficult for borrowers to discover it.
A small green dot appears next to the word APR on desktop computers, but it's easy to miss.
On mobile devices, there's no green dot, and the origination fee isn't disclosed unless the borrower taps on the APR.
Suggestion: Origination Fee
LendingClub's training materials acknowledge that many consumers don't know about the origination fee.
LendingClub's quarterly complaint reviews have proposed highlighting the origination fee to reduce complaints.
One LendingClub compliance review noted that the origination fee is not readily apparent, which could be perceived as deceptive.
You can report LendingClub to the FTC by calling 1-877-382-4357, a toll-free number.
To avoid hidden fees in the future, get a list of all fees, including origination fees, in your loan agreement.
Frequently Asked Questions
How much is a typical origination fee?
A typical origination fee is 0.5% to 1% of the loan amount, charged by lenders for processing loan applications. This fee may be negotiable, but often comes with a higher interest rate.
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