When to consider: A last resort in a true emergency after you’ve exhausted other options
LendUp is an online lender that makes small loans — both lump-sum and installment — to borrowers with low credit scores.
LendUp’s rates are as high as traditional payday loans in some cases, and lower than payday loans in others. It offers some borrowers incentives to get lower rates. Still, a LendUp loan is an expensive form of credit when you need quick cash. NerdWallet recommends exploring all your alternatives before taking it.
LendUp rates and terms
|APR range||152% - 1,356% for lump-sum loans
30% - 180% for installment loans
|Loan amounts||Varies by state
|Time to funding||Typically one day|
|Payment flexibility options||
LendUp personal loan review
To review LendUp, NerdWallet collected more than 30 data points from the lender, interviewed company executives and compared the lender with others that seek the same customer or offer a similar loan product. Loan terms and fees may vary by state.
LendUp, founded in 2012, calls itself a safer alternative to payday loans because it gives borrowers pathways to build credit and get lower rates.
The average LendUp customer has a credit score of 550, makes $40,000 to $45,000 a year and has a debt-to-income ratio of 58%, according to the company. People typically use the loan for emergency expenses, says Anu Shultes, general manager of loans at LendUp.
Loan example: Lump-sum loans are paid back in full on a certain date, while installment loans are paid back in equal portions over a period of time. Let’s look at cost examples for both:
- Lump-sum loan: On average, LendUp says, a borrower takes $295 and pays it back in 1 month with a fee that is 19% of the amount borrowed. That works out to:
- Fee: $56
- Lump-sum payment due: $351
- Annual percentage rate: 231%
- Installment loan: On average, a LendUp borrower takes $386 for 12 months at an APR of 53%, according to the company. That works out to:
- Monthly payment: $42
- Total interest: $120
- Total amount due: $506
How to qualify: LendUp doesn’t check your credit score for approval; it only requires that you have a checking account, a valid phone number and address. The company scans your bank transactions and looks at data from Clarity Services, a bureau that collects information on consumers with low credit scores, Shultes says.
LendUp offers three tiers of loans: lump-sum loans, installment loans with rates above 36% and installment loans with rates below 36%. Loans with rates above 36% are classified into silver, gold and platinum, while loans below that rate are called prime loans.
Loan features: Depending on your state laws, you have the option to get platinum installment loan payments reported to the three major credit bureaus, which can help your credit score. If you qualify for a prime loan, payments are automatically reported.
Lump-sum loan payments are reported only to alternative credit bureaus that collect data on consumers with low credit scores, so it may not help your score.
LendUp allows borrowers to extend lump-sum loan terms without a fee, unlike traditional payday lenders. This feature helps you avoid adding costs to your loan if you need more time to repay. You can extend it to the maximum allowed by your state or, if you need additional time, you can call the company to talk about a hardship plan.
The LendUp Ladder and how it works
Borrowers can reduce rates and get other features through a rewards system called LendUp Ladder. To earn points and move up the ladder from silver to prime, you need to make on-time payments and watch financial education videos. LendUp says borrowers must earn between 5,000 and 10,000 points to graduate from one tier to the next.
Depending on your state’s laws, graduating between loan tiers makes you eligible for lower rates, larger loan amounts and the option to have your payment activity reported to the credit bureaus. LendUp says borrowers typically move up the ladder after taking two or three loans.
Even with rate-reduction incentives, NerdWallet does not recommend long-term, high-rate loans or taking loans on a repeat basis. For some borrowers, such loans can become unaffordable, and you may end up paying more in interest than the original amount you borrowed.
In 2016, LendUp paid over $6 million in fines and refunds to federal and state regulators for problems with the credit reporting feature and LendUp Ladder. The company said the issues dated back to its early years as a startup and have since been fixed.
How LendUp compares
Both Rise and OppLoans, similar payday alternative lenders, offer installment loans that have rates comparable to LendUp’s installment loan rates. Both also allow borrowers to build credit by reporting payments to the credit bureaus (OppLoans reports to all three; Rise reports to two.) Rise allows a 7-day payment extension on its loans, but interest still accrues. OppLoans allows hardship plans on a case-by-case basis.
Rise lets borrowers lower rates, but typically requires 24 on-time payments before a borrower is eligible to do so. Rise also checks borrowers’ credit, conducting a hard credit pull that can temporarily ding your score.
LendUp is not a good idea if you:
- Are trying to build credit: A secured credit card, a credit-builder loan or paying off existing debt are faster and cheaper ways to build credit. See ways to build credit. If you don’t know your credit score, get a free score on NerdWallet.
- Can get cash elsewhere: NerdWallet recommends exhausting cheaper alternatives first, even in an emergency:
|Alternatives to high-interest loans|
|1. Ask family and friends for a loan through lending circles or a loan agreement|
|2. Seek assistance from local nonprofits, charities and religious organizations|
|3. Get a payday alternative loan from a credit union|
|4. Ask your employer for a paycheck advance|
|5. Use an app like Earnin to get a paycheck advance|
|6. Go to a pawnshop|
Before you take a LendUp loan:
- Exhaust all other options: If none of the alternatives listed above work for you, see if you can buy time from your creditor, work out a payment plan or face the short-term financial consequences of not paying, such as a late fee.
- Compare the cost of taking the loan to the cost of not taking it: Calculate the overall cost of not having funds for your purpose, then weigh that against the typical cost of this loan in your state.
- Learn about high-cost loans: Loan options and alternatives can be overwhelming. Knowing the warning signs of predatory lending can help you steer clear of the most harmful products.
If you take a LendUp loan
If you decide to take a LendUp personal loan, carve out room in your budget to pay the loan off as soon as you can to save on interest charges. Loans from LendUp are too expensive to be a long-term or repeat solution for your finances.