LendingClub has found consumers are prioritizing personal loan repayments over credit cards during the financially stressful time of Covid-19.
Customers of the US peer-to-peer lending platform said they are more likely to use a credit card to pay for their LendingClub personal loan because the personal loan feels more important and they see it as an important step on the road to financial health.
Despite their high average income level and healthy credit profile, 77 percent of respondents who took out a personal loan with LendingClub said they were affected by financial stress, while 89 percent said personal loans have helped them meet their financial goals.
The majority (90 percent) said the personal loans helped them save money for their existing debt so they could start saving for a more comfortable life.
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“We’ve always believed in prudent underwriting and smart growth, and this recession allows us to demonstrate the resilience of the personal credit asset class,” said Arun Sikka, vice president of lending risk and returning member experience at LendingClub.
“Members are working hard to reduce expenses, make savings and stay on track with their bills.
“Our payment rates reflect the importance of the LendingClub personal loan to their financial goals and our platform’s ability to adapt to a rapidly changing environment while supporting our members during this uncertain time.
“This close relationship with our members, coupled with the strength of our digital underwriting and service capabilities, positions us to see strong growth again as the unemployment rate falls, borrowers transition to a normal payment schedule and liquidity to capital markets returns.”
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LendingClub research found that its members measure their financial peace of mind by being able to pay bills without going into debt (46 percent), having fewer money worries (24 percent) and being able to retire comfortably (17th Percent).
In May the Platform launched their Member Center, a hub of resources and tools to support its borrowers during the uncertain time caused by the pandemic.
One tool includes its credit profile, designed to help borrowers manage their financial needs while improving their future credit scores.
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“Financial health is important to all of our members, regardless of why they come to LendingClub. For this reason, we have introduced special tools like the credit profile in the member center so that members can understand which behaviors are affecting their overall credits,” said Ram Alagianambi, head of product, membership and multi-loan at LendingClub.