Circleback Lending Peer to Peer Lending
CircleBack is one of the industry's newer peer to peer lenders but the company has already made a mark. Founded in 2013, CircleBack has originated more than $500 million in loans. CircleBack offers loans for a variety of reasons which include debt consolidation, home improvement, small business loans, medical bills and more.
CircleBack connects investors to borrowers who either can't get a loan from a bank or simply want to cut out the middleman. In this case, traditional financial institutions are the middleman. Investing and borrowing from CircleBack is mutually beneficial for investors who are looking for a place to put their money other than stocks and bonds as well as the borrower because banks and other financial institutions are imposing increasingly strict credit requirements. Depending on your credit risk, a borrower can receive funding for a loan in a matter of days.
CircleBack Lending makes it easy for you to obtain online financing for a wide variety of purposes. You can fill out their simple application form where they will do a soft pull on your credit to determine eligibility. CircleBack Lending still will require documentation after you apply, but individual investors will review and fund your loan.
While CircleBack is an ideal choice for those with weaker credit scores, it isn't for everyone. The company will only consider borrowers with a minimum credit score of 660, which is a bit higher than its competitors. So those with poor credit scores will be unable to obtain funding through the company. However, if you do have a score of at least 660, is most ideal for borrowers seeking debt consolidation. Borrowing from CircleBack would allow you to pay off your debt with a single monthly fixed payment.
In addition to the 660 credit score, CircleBack borrowers must be at least 18 years of age and a U.S. resident. In addition, CircleBack requires a low debt-to-income ratio, a credit history greater than 3 years, as well as a credit profile with limited delinquencies and derogatory records. The average CircleBack loan is about $15,000 and is primarily for the purpose of refinancing high-interest credit card debt or making major purchases.
Once a borrower's credit history has been pulled, the borrower must then accept the amount, interest and length of their respective loan. Once accepted, investors are allowed to review and fund the loan. Once the loan is funded, the funds are deposited directly into the borrower's bank account.
If eligible, you can borrow from $3,001 to $35,000 for three or five year terms at fixed interest rates. Once approved, they will assign you a grade based on your creditworthiness from A being the best to H being the riskiest. This grade determines what your APR range is depending on the length of the loan term. The lowest APR you could qualify for is 5.96% APR while the highest is 36.00% APR. This means if you qualify for a higher interest rate, it might put you right in line with what you would receive from traditional lenders.
CircleBack Lending does charge origination fees for their loans. Depending on the grade they assign you, your loan's origination fee could be anywhere from 0.99% to 4.99% of the loan's total balance. For illustration purposes, if you borrowed $20,000, with an E grade, your origination fee would be $998. They would deduct this amount before disbursing your funds. They also charge an administrative fee of $5 for check processing, which is $10 less than what Peerform charges.
They also offer a wider grace period than other lenders. They won't charge you for a late fee unless you are 16 days or more past due on your account. Meanwhile, reputation wise, they are good, as they earned an A rating from the Better Business Bureau.
Another perk CircleBack Borrowers enjoy is no prepayment fees. So borrowers should feel free to pay their loans ahead without worrying about any additional charges. Borrowers should expect to receive their funds in about two to five days. Unlike most peer-to-peer lenders, a borrower's loan does not stay open until it is fully funded by a group of investors. Instead, each loan is fully funded when a single investor chooses to finance your loan.
While the company does not state any explicit requirements for investors other than being an accredited investor, ClickBack does have a certain type in mind. CircleBack describes its ideal investors as a high-net-worth individual looking to add high-quality consumer credit assets to their investment portfolio.
One thing for investors to consider is that while CircleBack requires a higher credit score than its competitors, they do face more risk. Requiring that each investor fully invest in a single loan increases the investor's risk in funding a loan which will ultimately default. Or, at the least, it exposes the investor to a bigger potential blow if it does. This requirement also makes it a bit more difficult to diversify their investments because each investment must be $2,000, which is the smallest loan the company will approve.
While generally good, CircleBack's customer service does leave something to be desired. Representatives are available by phone every day and waiting times are typically low. However, the company's website has limited information and its frequently asked questions section, which could answer a customer's simpler questions, is fairly limited. Other than this, the company's customer service is helpful and responsive.
Verdict - Good
CircleBack Lending makes it easy to apply for financing online without impacting your credit score. Their wide range of rates and loan amounts can meet your needs. However, it's important to be mindful of the short three to five year terms. On one hand, you won't pay as much in interest, but your monthly payments will be higher. That said, CircleBack is a great option for those with excellent credit and plan to prepay their loan. CircleBack is a good option for investors as well, but they should be careful in making their investment decisions since they will be fully funding loans.