Payday loans are a risky endeavor. Coming in at a budget-shattering average interest rate of 400%, once you’re involved in a payday loan, it’s hard to get out.
But there are times when you might not have any other option. So if these loans are a necessary last resort for some, are there any responsible versions available?
Online lender LendUp would say yes. While the interest rates are in the typical payday loan range, the company touts its “LendUp Ladder” practices that help customers work their way toward better rates.
LendUp is a last-resort option for borrowers without strong credit who are seeking a smaller loan ($100 to $1,000) and can afford to repay it on time, avoiding the company’s exorbitant APRs.
Here’s how LendUp works, along with information from other LendUp reviews, including details about the company’s past legal woes.
So what is LendUp, exactly? Describing itself as a “socially responsible lender,” LendUp provides short-term credit to those who might not be approved for prime financial products. The company has provided 6.4 million loans with a combined value of over $2 billion since its founding in 2011.
While this isn’t very different from traditional payday lenders, LendUp distinguishes itself by also offering customers ways to improve their financial situation.
- LendUp offers payment extensions and altered repayment plans on single-payment loans to help borrowers who can’t pay it all back at once.
- The LendUp Ladder helps borrowers earn points to become eligible for installment loans, better rates and payment reporting to the credit-reporting bureaus.
- Borrowers can earn these points by paying off their loan on time, taking financial education courses online through LendUp and submitting a testimonial video.
LendUp specializes in short-term credit but offers it in a variety of ways. You can use LendUp to get a single-payment loan or, after laddering up, an installment loan.
|Maximum borrowing amounts|
|Single-payment loan||Installment loan|
|● $255 (when borrowing in California)
● $300 (Louisiana, Mississippi, Missouri, Tennessee, Texas and Wisconsin)
|● $400 (California, Louisiana, Missouri and Texas)|
|As of Sept. 4, 2020|
Payment schedules and repayment protections also vary by state.
As mentioned above, LendUp offers courses to help its borrowers earn points to climb up the ladder towards better interest rates and reporting to your credit bureau, which can help you build your credit score. The LendUp education platform has a variety of videos, with topics including:
- Credit building
- Understanding your rights
- The cost of credit
- Budgeting for beginners
Let’s now move to the key focus of any LendUp review: the pros and cons of borrowing there. We’ll start with the upsides…
The general appeal of payday loans is fast, accessible funding. LendUp delivers on that front, with microloans of as little as $100.
If you’re approved for a LendUp loan, you could receive the funds deposited to your bank account as soon as the next business day. As of Sept. 4, 2020, the company’s previously-offered features (15-minute and same-day transfers) were unavailable.
The other major positive of LendUp loans is its flexibility should you be unable to repay your debt on time.
If you struggle to repay a single-payment loan on time, you could extend your loan term or enter into a payment plan. Your options will vary depending on your home state.
If you’re 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 rest easy, knowing that adjusting your repayment timeline (or even making a late payment) won’t negatively impact your credit score. That’s because single-payment loans aren’t reported to the credit bureaus.
With that said, repayment options are lacking for LendUp installment loans, and credit reporting could be in play, depending on your state’s laws.
LendUp loans might not be as accessible as advertised, especially if you don’t have a Social Security number and active checking account. Both are requirements for borrowing.
LendUp also isn’t an ideal option for the following reasons.
LendUp isn’t available throughout the U.S. Below are the states LendUp works in currently:
|Single payment loans and installment loans||Single payment loans only|
The fees LendUp can 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 by state. There are also fees in some states for:
- Making a loan payment with a debit card
- A returned check if your account is lacking funds
These fees don’t include the interest rates, which also change based on the loan type and the state in which you’re borrowing. Like payday loans, the interest rates are well into the hundreds and thousands (Wisconsin registered a high of 1,016.79%, as of Sept. 4, 2020), paling 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 on interest and fees on their products.
You can check LendUp’s rates and notices page to see what kind of rates you might be able to get in your state.
If you arrived at LendUp’s website thinking that the company could be a stepping stone to better credit, you might be disappointed.
Successfully-repaid single-payment loans aren’t reported to the credit bureaus. And although you could work your way up the LendUp ladder and borrow larger loans at lower rates, not all states allow credit reporting for them either.
If you’re looking to borrow, you might consider potentially lower-cost ways to build credit, including signing up for a secured credit card, or becoming an authorized user on a family member’s card.
Before choosing a credit builder tool, weigh the pros and cons to ensure it helps, not hurts, your financial future.
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 the status of your application and make payments.
LendUp doesn’t charge money upfront – if you receive an interaction that you’re not sure of, call LendUp at 1-855-2LENDUP or email [email protected].
Although LendUp calls itself a socially responsible lender, LendUp reviews on customer service point to some 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 a variety of violations
- And like most lenders, it has registered mixed reviews online
As for the CFPB’s action, then-LendUp CEO Sasha Orloff said in a 2016 TechCrunch interview that the violations stemmed from “legacy issues that mostly date back to our early days as a company. … In those days we didn’t have a fully built out compliance department. We should have.”
Deciding if LendUp’s products are right for you
While LendUp seems to be more transparent than shady payday lenders, it’s clear there may be risks involved – some of the same risks that exist with many payday lenders, such as astronomical fees and APRs.
However, LendUp reviews aren’t all negative. The company does offer a chance to extend your single-payment loan without going deeper into debt from excessive fees. And if you work to build points and climb the LendUp Ladder, you might be able to free yourself from the initially (very) high interest rates and start to improve your credit history.
If you see LendUp as a tool to build credit, however, consider the much-lower-interest 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, that might be a much easier and more seamless process for you.
Andrew Pentis contributed to this report.