LendUp Loans: Should You Get One?

Ellen Sirull

Ellen Sirull | Blog

Jul 25, 2019 | Updated Jul 26, 2019

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According to the Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2018, 39% of Americans couldn’t cover an unexpected expense of $400 with cash, savings, or a credit card paid off at the next statement.

Historically, there were few options if you didn’t have an emergency fund or credit card to fall back on for extra money. Most people had to turn to payday loans which come with hefty APRs.

Enter LendUp — a company offering a digital solution considered an alternative to traditional payday loans (although some offers are a lot like payday loans, with massive APRs).

LendUp provides short-term single payment loans to those who need immediate help, and installment loans to more seasoned borrowers who may be looking to build credit. (It also used to offer a LendUp credit card, the Arrow Card, but that offering has moved to another company — Mission Lane — as The Mission Lane Visa® Credit Card.)

LendUp is really something to consider as a last resort if you’re dealing with an emergency situation. There are several other strategies and options to pay off debt you should consider first.

LendUp Loans: A Quick Look

The main benefit of LendUp is getting a quick, secure loan for emergency situations that pop up, even if your credit isn’t great (instead of turning to typical payday lenders). But we describe some other solutions below to look into first, however, before taking this route and incurring large amounts of interest.

In general, loans for shorter periods will have higher interest rates. So, if you use LendUp, review your options and pick the most cost-effective solution.

Here’s a snapshot of what LendUp offers (as of the publication date). Take note that the specific details will vary by applicant, loan type, and state of residence.

Loan Types Offered
  • Short-term single payment loans
  • Long-term installment loans
Average Annual Percentage Rate (APR) Range
  • Single payment loans: usually from 214–458%, but may be higher than 1,000%
  • Installment loans: usually from 35–180%
Loan Amounts Available
  • Single payment loans: usually $100–$500
  • Installment loans: usually $100–$1,000
Repayment Schedule
  • Single payment loans: usually 8–30 days
  • Installment loans: usually 2–12 months
Credit Impact
  • Single payment loans: Applications have no credit impact (soft inquiry instead of hard inquiry), and accounts are not typically reported to the credit bureaus.
  • Installment loans: Applications may impact your credit with a traditional hard inquiry, and most accounts are not reported to the credit bureaus.
  • Only consumers in some states using the LendUp Ladder program at the highest two levels (Platinum and Prime) have loan accounts and payment details reported to the three major credit bureaus.
Approval Requirements
  • Good credit isn’t required.
  • LendUp needs information such as your address, income, and Social Security number.
  • You need a checking account that can accept electronic transfers.
  • In some states, you may have to provide documentation to verify your income.
Timeframe for Loan Funding Money can be in your account by the next business day once approved.

Applying for a LendUp Loan

Essentially, LendUp offers two main types of loans — short-term loans and installments loans.

LendUp explains that applying for a short-term single payment loan won’t impact your credit scores. That’s because it doesn’t use a hard credit inquiry to check your finances for this loan type, but rather a soft inquiry. LendUp offers a quick online application and (usually) provides instant decisions 24/7.

Short-term loans are LendUp’s main product offering, but they’re only available in certain states, shown below.

Short-term loans:

  • May be called cash advance loans or direct loans, or promoted as alternatives to payday loans.
  • Must be paid off in one lump sum after a certain amount of time that is agreed upon at the start of the loan.

LendUp also offers installment loans, but those are limited to even fewer states. Furthermore, to get an installment loan you need to progress through the LendUp Ladder by starting with short-term loans, as explained below. Installment loan applications will usually require a hard inquiry on your credit.

Installment loans:

  • May also be referred to as personal loans or credit building loans (if they are reported to the major credit bureaus).
  • Are payable over a certain amount of time which is agreed upon at the start of the loan, with equal payments each month until the total amount is paid off.

In addition to the approval requirements mentioned in the table above, because of the John Warner National Defense Authorization Act (which limits the APR on closed-end credit extended for 91 days or less), LendUp doesn’t currently offer short-term loans to military personnel and their dependents.

Eligible States

LendUp is currently (as of publication) accepting new customers for short-term loans in California, Louisiana, Mississippi, Missouri, South Carolina, Tennessee, Texas, and Wisconsin.

Long-term installment loans are available in the states above except for South Carolina.

In some states, like Texas, LendUp will not be the direct lender for certain loans, but rather is a Credit Access Business (CAB). This means it will attempt to arrange a loan between you and a third-party lender, then service that loan once it’s issued.

Get all the state-by-state loan details, guidelines, and interest rates here on LendUp’s website.

How to Get Approved for a LendUp Loan

Since many of LendUp’s customers may have bad credit, the company looks outside the traditional credit bureaus to get an idea of creditworthiness.

LendUp’s website notes it uses multiple FCRA-compliant data sources. The underwriting team reviews traditional credit bureaus, non-traditional credit bureaus, and public records during the application process. LendUp also verifies your identity and assesses your ability and likelihood to repay the loan.

What Amount Can I Get Approved For?

The loan amount you’ll qualify for depends on your individual state laws, personal eligibility, and other factors like income.

Select your state and LendUp will show you the available loan amounts, durations for loan repayment, and pricing. Depending on the state you live in, short-term loans usually range from $100–$500, while installment loans are from $100–$1,000.

How Does LendUp Decide the Repayment Schedule?

Most of the loan options let you select how long you need, ranging from 8–30 days for short-term loans and 2–12 months for installment loans.

For short-term loans, LendUp suggests picking a date just after payday, so you know you’ll be covered.

How Do I Pay Back a LendUp Loan?

Payments for short-term loans are completed via ACH transfer from the same bank account the funds were deposited into after the loan origination. This happens on the date selected by you when applying for and accepting the loan.

For installment loans, the payments happen on the agreed-upon date each month over the term of the loan (usually up to 12 months).

Does LendUp Report On-Time Loan Payments?

While on-time payments can help you build credit when reported to the three major credit bureaus, most LendUp loans aren’t reported to the major credit reporting agencies. Your credit won’t be impacted in any way, positive or negative, unless you’re a member of a higher tier in the LendUp Ladder program (and the availability for that varies by state).

LendUp only reports loan payments to the three main credit bureaus for installment loans at the Platinum and Prime levels of the LendUp Ladder (reporting is optional at Platinum and automatic at Prime).

If you’re looking to build credit history, we recommend checking out some other options like credit cards or credit builder loans, which we outline a bit later in this article.

What If I’m Not Approved?

If you’re not approved, the information regarding why will be available in your account dashboard once you log in. LendUp will send you an email once you’re eligible to reapply, but there’s no official time frame on how long that is.

Can I Get Another Loan With LendUp?

After you pay off one LendUp loan, you’ll be able to get another one if you need it. You usually just have to wait approximately four days (though this can vary depending on your bank).

Are These Payday Loans?

Some of the short-term loan options from LendUp have high APRs and are practically indistinguishable from payday loans. LendUp is a bit different from traditional payday loan lenders, however, because:

  • These loans are offered exclusively online and on your mobile device, so they’re more secure and convenient than traditional brick-and-mortar payday loan providers.
  • With the LendUp Ladder program (if it’s available in your state), you can earn points that may lead to the ability to apply for installment loans, at lower rates and for longer periods of time.
  • LendUp has reporting relationships with the three major credit bureaus that allows the company to report payments on some installment loans in some states, as noted above.
  • LendUp offers free financial education courses to learn about credit reports, credit scores, how credit cards work, and the essentials of saving.

The LendUp Ladder

LendUp offers a helpful program called the LendUp Ladder, a way for people who successfully pay back single payment loans to qualify for installment loans at lower rates. It’s only available in the states mentioned above, though. Residents of those states can take advantage of the program by earning points to “climb the ladder.”

In addition to making on-time loan payments and paying off loans, participants can earn points by taking free financial education courses through LendUp or sharing their stories. In certain states, the highest levels of the ladder also offer credit reporting of account details and payments to the three major credit bureaus (Equifax, Experian, and TransUnion).

Here’s an example of the Ladder levels available in California:

The LendUp Ladder in California.

California’s LendUp Ladder. Image credit: LendUp

Example LendUp Loans

Here’s what some sample loans through LendUp might look like in different states (based on loan amounts, fees, and interest rates available at the time of publication).

Short-Term Single Payment Loans

State Loan amount Loan term Repayment Amount
(Including Fees)
APR
Mississippi $100 7 days $119.50 1,016.79%
California $100 14 days $117.60 458.86%
Tennessee $400 14 days $466.40 432.79%
Wisconsin $500 30 days $620.00 292%

Long-Term Installment Loans

State Loan amount Loan term Repayment Amount
(Including Fees)
APR
California $100 2 months $108.45 70.06%
Louisiana $500 6 months $598.93 66.3%
Tennessee $800 9 months $910.25 32.4%
Texas $1,000 12 months $1,166.93 29.83%

As mentioned before, exact details will vary depending on the state you live in and your eligibility.

Downsides of LendUp

While LendUp may be better than some traditional payday loan options because of slightly lower interest rates (in some cases) and more secure transactions online, you’ll still pay hefty amounts of interest.

Also, as previously mentioned, in most cases you won’t get the benefit of having your payments reported to the major credit bureaus.

Some Past Issues

LendUp was fined $3.63 million by the Consumer Financial Protection Bureau (CFPB) in September 2016. The CFPB found that LendUp didn’t provide the “opportunity to build credit and provide access to cheaper loans, as it claimed to consumers it would.”

LendUp hasn’t had any issues since then, though.

Additional Ways to Improve Your Financial Health

Regardless of whether you’re looking to cover an unexpected expense, reduce large amounts of debt, or build credit, there may be better methods available to you.

Other Ways to Cover Financial Emergencies

While there still aren’t many options, the emergence of fintech startups has led to more companies providing emergency loan funds. Earnin, an example of one of those startups, provides consumers with an app to get money earned at their jobs before payday. There are no fees or interest, but users can decide an amount they’ll pay (or “tip”).

While some companies can offer temporary relief (at a price), your best bet is to start building up an emergency fund today in case you face a financial hiccup or an unexpected cost hits your budget.

Other Ways to Tackle Debt

There are various strategies to reduce debt, including the debt avalanche and snowball methods. Also, some consumers use personal loans or balance transfer credit cards to consolidate or reduce the interest accruing from credit card debt. You’ll want to research your options and make sure you weigh any costs, like transfer fees and interest.

Additional Ways to Build Credit

If you’re considering LendUp as a way to build credit, there are other options available including:

The Bottom Line About LendUp

If you’re in a bind and need money immediately, LendUp can be one route to go. But interest rates are quite high, so check out other options first.

Consider making a plan for the future. Being proactive about building up an emergency fund and taking steps to pay down credit card debt can put you in a better position to cover those surprise expenses when they come up.

Ready to learn more about credit and credit cards? Find more topics in the Insider Academy.
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