Payday loans are risky business. Coming in at an average interest rate of 400%, once you get involved in a payday loan, it’s hard to get out of it.
But there are times when you may have no other option. So if these loans are a necessary last resort for some, are there responsible versions available?
Online lender LendUp would say yes. While interest rates are in the typical range for payday loans, the company touts its “LendUp Ladder” practices that help customers 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 back on time, avoiding the company’s exorbitant APRs.
Here’s how LendUp works, plus information from other LendUp reviews, including details about the company’s past legal issues.
LendUp Reviews: The Basics
So what exactly is LendUp? Describing itself as a “socially responsible lender”, LendUp provides short-term credit to those who may not be approved for prime financial products. The company has issued 6.4 million loans with a combined value of more than $2 billion since its inception in 2011.
While not much different from traditional payday lenders, LendUp sets itself apart by also providing customers with ways to improve their financial situation.
- LendUp offers payment extensions and modified repayment plans on single payment loans to help borrowers who cannot repay everything at once.
- The LendUp scale helps borrowers earn points to become eligible for installment loans, better rates and payment reports at credit bureaus.
- Borrowers can earn these points by repaying their loan on time, taking online financial education courses 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 single payment loan or, after progressing, an installment loan.
|Maximum borrowing amounts|
|Single payment loan||Installment loan|
|● $255 (if borrowing in California)
● $300 (Louisiana, Mississippi, Missouri, Tennessee, Texas and Wisconsin)
|● $400 (California, Louisiana, Missouri and Texas)|
|As of September 4, 2020|
Payment schedules and refund protections also vary by state.
As mentioned above, LendUp offers courses to help its borrowers earn points to move up to better interest rates and report to your credit bureau, which can help build your credit score. The LendUp educational platform offers a variety of videos, with topics such as:
What we like about LendUp
Now let’s get to the main focus of any LendUp review: the pros and cons of borrowing there. We’ll start with the good stuff…
If you are approved for a LendUp loan, you could receive the funds deposited in your bank account as soon as the next business day. As of September 4, 2020, features previously offered by the company (15-minute and same-day transfers) were not available.
The other major advantage of LendUp loans is its flexibility if you are unable to repay your debt on time.
If you’re having trouble repaying a one-time payment loan on time, you can extend the term of your loan or enter into a payment plan. Your options vary depending on your home state.
If you are a single payment loan borrower in Louisiana, 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 changing your repayment schedule (or even making a late payment) won’t negatively impact your credit score. This is because one-time payment loans are not reported to the credit bureaus.
That said, repayment options are lacking for LendUp installment loans, and credit reports could be at stake, depending on your state laws.
LendUp loans may not be as accessible as advertised, especially if you do not have a social security number and an active checking account. Both are borrowing conditions.
LendUp is also not an ideal option for the following reasons.
LendUp is not available in the United States. Below are the states in which LendUp is currently working:
|Single repayment loans and installment loans||Single payment loans only|
The fees 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 caps for installment loans also vary from state to 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 change depending on the type of loan and the state you are borrowing from. Like payday loans, interest rates run into the hundreds and thousands (Wisconsin recorded a high of 1,016.79%, as of September 4, 2020), pales in comparison to the single- and double-digit rates typically charged on personal loans and other debt products.
For its part, LendUp says its borrowers have saved $150 million in interest and fees on their products.
You can check out LendUp’s rates and reviews page to see what kind of rates you might be able to get in your state.
It may not be the most effective way to improve your credit
If you arrived at LendUp’s website thinking the company 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 ranks and borrow larger loans at lower rates, not all states allow credit reports for them either.
If you’re looking to borrow, you might consider potentially less expensive loans ways to build credit, including signing up for a secure 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 upload application documents, such as proof of income, check your application status, and make payments.
LendUp does not charge money upfront – if you receive an interaction you are unsure about, call LendUp at 1-855-2LENDUP or email [email protected].
Although LendUp calls itself a socially responsible lender, LendUp’s customer service reviews indicate major 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 offenses
- And like most lenders, it has had mixed reviews online.
As for the action of the CFPB, Sasha Orloff, then CEO of LendUp, said in a TechCrunch Interview 2016 that the violations stemmed from “legacy issues that mostly date back to our early days as a company. …At that time, we didn’t have a fully built compliance department. We should have.”
Deciding if LendUp’s products are right for you
Although LendUp appears to be more transparent than sleazy payday lenders, it’s clear there can be risks — some of the same risks that exist with many payday lenders, such as astronomical fees and APRs.
However, LendUp’s reviews aren’t all negative. The company offers the option to extend your one-time payment loan without putting yourself further in debt due to excessive fees. And if you work to rack up points and climb the LendUp ladder, you might be able to break free from the initially (very) high interest rates and start improving your credit history.
If you consider LendUp as a tool to build credit, consider the much lower interest rate 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.
Andre Pentis contributed to this report.