It depends on how you plan to use your loan. Direct Pay loans are a great option to pay down or consolidate multiple debts, while cash loans may be a better fit for a single large expense.
Understanding the benefits of Direct Pay loans with LendingClub
Direct Pay loans have a lot of benefits, including:
Lower rates:
A Direct Pay loan may offer a lower APR than a credit card, depending on your credit profile and loan terms.
Debt consolidation:
If you want a loan to help pay down or consolidate multiple other debts, Direct Pay loans can take some work off your plate. With LendingClub, you can use your loan to pay off your credit cards and personal loans directly.
Fixed rates:
LendingClub's Direct Pay loans have fixed interest rates, providing predictable monthly payments without the rate changes that can occur with credit cards.
Any loan money left over after your creditors are paid goes directly to your bank account.
Getting the most out of your Direct Pay loan
If you've decided a Direct Pay loan could be the right fit for you, the application process will look like a cash loan. The main difference is that you’ll add the creditors you want to pay as part of your application process. Note that Direct Pay loans can’t be used to pay mortgages, auto loans, student loans, business loans, or existing LendingClub personal loans.
Once you’ve been approved, creditors are typically paid within a few days to a couple of weeks, depending on how they accept payments.
Continue making your regular payments until the creditors confirm they’ve received and applied our payment—otherwise you may end up with late fees. If you make an extra payment before the transfer is completed, you’ll typically receive a refund for any overpayment from your creditor. Reach out to them for any clarification.
Once you're sure the payment has been received, consider contacting your creditors directly to close your paid accounts.
