I have been reviewing through a large number of Lending Club loans and noticed some humorous descriptions of the reasons why people want the loan. These should serve as advice for anyone who is planning to write up a Lending Club loan application. Remember that most all lenders are investors and want their money back with interest. The main reason that people loan borrowers money is not because you need it but because they believe that you can and will pay back the loan.
Loans are similar to requesting a tourist visa to come to visit the US — the person deciding whether to give the potential visitor the visa wants to know the reason you want to visit mainly to see that it is reasonable. The main thing that they want to know is that you plan to return to your country after you visit.
- You need to say SOMETHING in your loan reasoning. Loans numbered 76775, 89258 have the description field left entirely blank and even the subject line does not give any indication of what the money is for. Loan 76775 was not funded but the other one was.
- A loan should not be an income supplement. “I just need something that can help me supplement my income a little” People do not loan you money for your day to day income. If you cannot make your current obligations, how are you going to pay off the loan? Loan 74288 was not funded.
- Don’t mention that a good portion of the money is to pay your debt to your therapist. At best, it looks like you may be allowing someone to take advantage of you by putting you that much in debt. At worst, it makes you look like you might be unstable. Loan 81682 was not funded.
- Don’t mention that you are not going to change your free spending ways and will continue to spend money that you don’t have. “$3,000 to pay off credit cards with insanely high rates, and $2,000 just so I can go on vacation with my friends and not have to stay at the hotel because I can’t afford to do anything.” Did you think that maybe you should tell your friends you can’t afford go on vacation. Loan 77680 was not funded. I wonder if he want on vacation anyway.
- If your want a business loan, at least tell lenders what the business is and how you plan to make money: “Initial cashflow to jump-start operations on small scale.” Loan 94517 did not fund.
- Do not mention that it is for a down payment on an item without mentioning how you are going to pay for the rest of the item. “down payment on a Pony!” This is not an excerpt from the application — it is the full description. Loan 76597 did fund in July 2007 and is current.
- Don’t mention that your parents will not cosign on the loan for you because it makes me think that your parents believe that you cannot pay back the money. “…and my parents refuse to help me by cosigning.” Loan 77915 did not fund and was removed.
- Don’t beg for the money — Desperation for the personal loan makes you sound like a poor credit risk. “I desperately need this loan.” Lending Club Loan number 103810 expired without being funded.
I hope that these examples of mistakes in personal loan applications might help you make a better description on your application which should help you have a greater chances of receiving funding for your loan.
There is fairly good chance that you will be rejected for the loan. There is still a chance that based on your credit history with no derogatory info and late payments you may get a loan. You have fair credit rating, two maxed credit cards and a new job.
Very infomative post.
I want to point outanother common loan application mistake,which is not fully explaining how the loan will be used. For example, if the loan is to be used for business purposes, explain the details of how you will use the money. Lenders want to see that you know exactly how you will use the money, and how this loan will meet your needs.
With the current credit crisis and lenders pulling back on the money they are willing to lend, it seems that Peer-to-Peer borrowing may very well be a more viable option for consumers who are tired of getting declined by banks? Ive just recently been introduced to this sort of lending but it seems like a win win situation. NO BANKS! p2p lending allows people to get their loans directly from lenders. There a a lot of companies that facilitate social lending Prosper, Zopa, Virgin Money, and Lending club are the most popular.
I suppose I shouldn’t be amused, but some of your examples of what not to say are hilarious!
Haha very funny. With all the loan sharks out there it is extremely hard finding a decent company that provides loans. I think Debtlab offers the best deals on personal and pay day loans
Providing the lender with correct information is vital. It saves time.