Lending Crowd review
The breakdown
- Offers secured and unsecured loans for individuals and businesses from $2,000 to $200,000.
- As a peer-to-peer lender, Lending Crowd facilitates lending between borrowers and investors rather than financing loans directly.
- The lender charges an establishment fee, but there are no loan service or early repayment fees.
Key loan details
- Interest rate: 8.95% – 24.60% p.a.
- Minimum loan amount: $2,000
- Available terms: 2, 3 or 5 years
- Secured or unsecured: Both
- Maximum loan amount: $200,000
- Establishment fee: $200 – $300 (for personal loans)
Author: Kevin McHugh, Head of Publishing at Banked.
Available loans and interest rates
Lending Crowd offers both secured and unsecured loans for personal, vehicle and business purposes.
The lender decides the interest rate you’ll receive based on 4 factors:
- Secured or unsecured loan: Secured loans receive a lower rate.
- Personal or business loan: Personally loans receive a lower rate than business loans.
- Loan term: Shorter loan terms result in a lower interest rate.
- Your Lending Crowd grade: Lending Crowd assigns each applicant a grade based on their creditworthiness. There are 9 grades ranging from A1 (best) to C1 (worst).
For example, if Lending Crowd assigned you the grade A1 and you wanted a secured personal loan for 3 years, your interest rate would be 8.95% p.a. — the lowest possible Lending Crowd interest rate.
However, if you wanted an unsecured business loan over a 5-year period, and your grade was C3, your interest rate would be 24.60% p.a. — the highest possible interest rate.
The amount you can borrow will also vary depending on whether you choose an unsecured or secured loan. Those ranges are:
- Secured loan range: $5,050 – $200,000
- Unsecured loan range: $2000 – $50,000
Personal loans
Lending Crowd offers personal loans that can be used for any purpose through its 100% online service. Its personal loan interest rates are as follows:
- Secured: 8.95% – 21.50% p.a.
- Unsecured: 9.25% – 24.20% p.a.
Vehicle loans
A Lending Crowd vehicle loan can be used to purchase any kind of vehicle, from a car to a caravan, bike, and beyond. If you choose a secured loan, the vehicle can be used as collateral to secure a lower rate.
You can get pre-approval for a vehicle loan and have funding in place before shopping. By doing this you’ll know exactly how much you can borrow and will be in a stronger buying position.
Its vehicle loan interest rates are as follows:
- Secured: 8.95% – 21.90% p.a.
- Unsecured: 9.25% – 24.20% p.a
Business loans
If your business has been operational for at least 18 months you may be eligible for a business loan from Lending Crowd.
The Kiwi lender focuses on small to medium NZ businesses and aims to make business finance as simple as possible for those within that category.
Its business loan interest rates are as follows:
- Secured: 9.95% – 21.90% p.a.
- Unsecured: 9.75% – 24.60% p.a.
Fees
These are the fees involved with a loan from Lending Crowd. Some of the following fees will only apply if you break the terms of the lending contract, such as missing a payment.
- Establishment fee: Described as a ‘platform fee’, the amount you will be charged for taking out a loan varies with your loan amount:
- $2,000 – $20,000: $200 platform fee ($450 for business loans)
- $20,050 – $50,000: $250 platform fee ($750 for business loans)
- $50,050 – $200,000: $300 platform fee ($1,500 for business loans).
- Overdue fee: An extra 20% p.a. will be charged on the amount in arrears while a repayment remains overdue.
- Arrears management fee: If a loan repayment remains overdue for more than 90 days in arrears management fee of $20 will be charged weekly.
- Repossession fee: A fee of $100 will apply if a loan is placed in collection.
Lending Crowd doesn’t charge any monthly loan servicing fees or early repayment fees.
Key features
Although only in operation since 2015, Lending Crowd has established a name as a major lender within NZ thanks in part to some unique features.
It’s a peer-to-peer lender
Lending Crowd doesn’t fulfil loans directly but instead matches those who want to borrow with those who are keen to lend as an investment opportunity.
The process works like this:
- Potential borrowers complete a loan application form, stating how much they would like to borrow and providing some key details.
- Lending Crowd assesses the application and provides loan options with different rates and terms. Borrowers choose the option that suits them best and move to the next step.
- Investors review the loan and make the decision to provide the funds. Investors never see the personal details of the borrower. The borrower then chooses the day on which they would like to receive the funds and the money will be deposited into their account.
Investors can invest as little as $50 and can choose to invest across multiple loans at once, diversifying their investment.
The same grading system that the lender uses to assess the creditworthiness of borrowers also allows investors to choose a risk-to-reward ratio that works for them.
Investing in loans to borrowers with strong creditworthiness will result in lower returns with less risk, while loans of a lower grade could result in better returns but involve more risk.
Interest rate transparency
Lending Crowd publishes the system it uses to grade borrowers, explaining the interest rate borrowers in each grade can expect to receive on a loan if their application is successful. This is unusual for a lender and many finance providers are much more opaque about their interest rates and when they apply.
It’s not possible to know what grade you will be until you apply, but Lending Crowd’s grading table can provide some indication of what to expect. Learn more about its interest rates on its website.
Regulation
Lending Crowd is licensed and regulated under the Financial Markets Conduct Act 2013. See its listing on the Financial Markets Authority’s website.
The lender is also part of Financial Services Complaints Limited (FSCL), an independent dispute resolution scheme. If you have a complaint about Lending Crowd and you are not able to resolve it with them directly, the FSCL can get involved and attempt to address the problem.
Eligibility requirements
In order to successfully apply for a loan with Lending Crowd you must meet the following criteria:
- Age: You must be at least 18 years old
- Status: You must be a New Zealand citizen, resident, or have a valid work permit.
- Identification: You must be able to prove your identity with either an NZ driver’s licence or an NZ or international passport.
- Bank statements: You will either need to provide electronic access to your recent bank statements or upload them to the Lending Crowd website.
- Credit history: You must have a good credit history.
If you are applying for a business loan you must also meet the following criteria:
- Your business must be at least 18 months old.
- You must have full ownership of the business.
- You must have annual revenue of at least $80,000.
Pros and cons of a Lending Crowd loan
Pros
- Offers both secured and unsecured loans to individuals and businesses.
- Its starting interest rate of 8.95% p.a. is comparatively low (but bear in mind you must meet very particular criteria to get that rate).
- You can get a loan quote without applying and affecting your credit rating.
- There’s no loan service fee or early repayment fee.
Cons
- The loan establishment fee can be as high as $650 (for personal loans over $50,050).
- The longest loan term possible is 5 years, which may not be long enough for some.
About Lending Crowd
Founded in 2015 and based in Auckland, Lending Crowd is one of a very small group of peer-to-peer lenders in New Zealand.
Rather than lending directly to customers, the lender brings together borrowers and investors and facilitates lending between the two through its platform. Borrowers can get the loan they need, and investors can earn a profit from loans they help fulfil.
This means that Lending Crowd is a service provider, not a bank or a finance company.
