Posted by John Donovan :: June 4, 2007 @ 10:16 pmLending Club only offers fixed rate installment loans. You will see your rate and know that after 36 payments you will have paid off that debt! Nice feeling isn’t it? We do not want to create more debt; we want to help our community with more responsible methods of getting out of debt.
Let’s contrast that with typical credit card offerings. The Government Accountability Office (see study on right) informs us that
“Multiple Interest Rates May Apply to a Single [Credit Card] Account and May Change Based on Market Fluctuations.”
According to the study, 93% (25 of 27 card programs) of credit cards have variable interest rates, most of which are re-set monthly. The rate may vary based on whether it is being applied to a purchase, a balance transfer, or a cash advance. And what rates do you think most people paid? In 2005, 11% of active credit card accounts paid more than 25% APR on purchases. 57% paid more than 15% APR. Check out page 71 of the GAO study for more.
For my money, Installment Loans just make sense (not more dollars in bank profit)!
Better rates. Together.
John from Lending Club
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