Lendit Financial Credit Rebuilding Loans

Lendit-FinancialSerious credit problems don’t necessarily disqualify you from a mortgage.

If you want good rates, however, you’ll need a prime (“A”) lender to approve you.

The challenge is, “A” lenders want to see re-established credit before they’ll consider an application. As a rough rule of thumb, that means two years of perfect repayment history, with at least two or more accounts.

There are various ways to obtain those two accounts. The most common is with a secured credit card (like Home Trust’s, Peoples Trust’s, or TD’s).

Lendit Financial offers a second type of option. It’s called the Lendit GIC Investment Loan.

With the GIC Investment Loan you make monthly payments. Those payments are then reported to the credit bureaus. After a period of perfect repayment (of the GIC Investment Loan and all other accounts), people generally see a noticeable improvement in their credit score.

In return for providing this service, Lendit charges 12.99% interest on its loans. That’s not cheap but it’s less than a credit card, commensurate with the borrower’s risk, and is offset by GIC interest. (In addition to paying interest, you accrue GIC interest ranging currently from 2.6% or 3.2%, depending on the term you pick.)

“Virtually everyone is approved,” says Lendit CEO Michael Wendland.

Lendit currently offers these term/amortization options:

  • 3-year ($2,300 loan) with $78/month payment
  • 3-year ($3,200 loan) with $108/month payment
  • 5-year ($5,500 loan) with $126/month payment

Wendland says the larger the loan, the bigger the effect it has on your credit rating. The 5-year $5,500 option is offered because “some A lenders want more than $5000 re-established out of bankruptcy,” he says.

Other things to know:

  • A $300 “administration fee” applies to Lendit’s loans (This is relatively reasonable given the fees charged each year by certain secured credit card companies)
  • Payments are automatically debited from your bank account on the due date each month
  • At the end of each term you receive the proceeds of the GIC that is placed in your name. This often serves as “forced savings for a down payment,” says Wendland.
  • This program is available in every province except Quebec.
  • Lendit is one of the “only lenders in Canada that can lend before bankruptcy is discharged,” according to Wendland.

Rob McLister, CMT

  1. …at the end …..every body wants our money…pay ..pay.. pay…interest on interest….for what?? CREDIT ???? Nooooo….pay cash ,and buy what you can pay today cash , with your own funds….!!! this is a sound financial advise.

  2. •Lendit is one of the “only lenders in Canada that can lend before bankruptcy is discharged,”
    What other lenders do this? With what other products?
    What low interest options are available if you have the 5,000 from the get go. To provide as security

  3. this is sound financial advice from the 1950s. heck, even before. nobody can pay cash for a house in a metro area like toronto, at least 99.99999999% of buyers don’t. not first-time buyers especially.

  4. Sorry but I find Lendit a little shady. Their target demographic is a stressed (sometimes desperate) group of people, their fees are quite high, and their web site features photos of a hand grasping a wad of cash (when, of course, the applicant does not actually receive any cash until the end of the term). It seems to me that they wish to inveigle the vulnerable into making a deal before they know its true nature or costs.
    I have chosen to rebuild my credit with secured credit cards. I use them frequently and pay off the balances, and so pay hardly any interest. As you’ve mentioned they do charge significant user fees (between $5 and $10/month). However, I’ve never found their advertising or business practices questionable.
    Just my two cents.

  5. Lendit is one of the “only lenders in Canada that can lend before bankruptcy is discharged,”
    Do the “A” lenders and insurers look at credit that commences before discharge…as reestablished? I would stick with the secured cards.

  6. Lenders DO consider credit that started before discharge and they prefer alternative trade lines besides just secured credit cards. I think Lendit is an installment loan so it would qualify.

  7. every lender is different, we look at reestablished after the discharge, we consider it an exception to look at maintained credit or credit obtained prior to discharge.

  8. Thanks for taking the time to share your opinions. LendIt Financial’s target audience simply consists of people that are trying to build, or rebuild their credit history, and improve their financial future through a GIC loan. While it can feel like a desperate situation for many, our clients consist of professionals and families alike. Our goal is to offer them a solution to work towards a healthy financial future. Our loan processes are posted on our website with full disclosure and discussion of costs, including the APR, and we are committed to ensuring that our clients are fully informed and comfortable prior to participating in Lendit’s non-revolving loan products.
    While you are to be commended for your passion and advocacy for secured cards and paying off your balance each month, secured credit cards can be dangerous for some people who have challenges with “charging temptation”. Many secured credit cards have monthly or annual fees that are considerable. At the $5-10 rate you mentioned, that’s $360 over three years, whereas Lendit’s fees are consolidated at $300 for our typical three year loan. Lendit is providing a loan for an asset (the GIC) that increases in value for the borrower and builds up some financial savings for them. In many professional opinions, secured credit cards work best when used TOGETHER with a non-revolving form of credit, such as an investment loan. (http://www.creditprofile.transunion.ca/learningCentre/creditScores/creditScoring.jsp) states that “a healthy credit profile has a balanced mix of credit accounts and loans”.
    At http://www.lenditfinancial.com we are constantly building on existing content to provide more materials that educate both visitors to the site and borrowers alike. There is currently not the image that you describe, but there was one previously, an image meant to enhance the content that stated “A healthier financial future is in your grasp”.
    As always, with our product and others, we advise due diligence to all our clients, and others we speak to. Wishing you continued financial success – Michael Wendland

  9. Every lender has different criteria. Some only want re-established credit with a minimum beacon score (low 600s) without really elaborating on the type of credit they want to see while others are picky with the type and number of reporting accounts and also a minimum amount of re-established credit (i.e. $2,500 on at least two trade lines).
    Revolving accounts (credit card) and open accounts (wireless) are proffered to re-establish credit because the balances fluctuate every month. If the individual is making payments on time for a few years when the balance is fluctuating or carries over, it demonstrates that they can handle credit responsibly. In contrast, installment loans are a fixed amount that are debited every month for a certain amount of time. While they can certainly be used to re-establish credit, lenders tend to look at revolving and open accounts more favorably.
    I believe there are better products than the one above to re-establish credit. Most banks now offer a secured credit card and after a year or two of good repayment history, they will consider returning the deposit to the individual. Two major credit cards, many of which carry no annual fees and even have reward programs, keeping the balances low, and making timely payments would help re-establish credit most efficiently from both time and cost perspective to the consumer.

  10. Many secured credit cards do not report to any credit bureaus. If you do the math on forced savings.. it might look like this:
    $5500/5yr trm/5yr amort= $1949.94 int approx.
    Less int saved at approx 2.99% on a GIC for $5500 = $817.20 approx.
    Net interest 5 yrs approx = $1132.74
    Now a secured credit card may cost upwards of 18% even cash secured.(Most cash secured cards charge a $7.50 load fee and a monthly fee of $2.50 plus a transaction fee so even though it looks like no interest add those fees and see what you are really paying). So while you cannot accurately calculate the interest due to fluctuations. Steady @18% assuming fully drawn = $2756.26 int
    less assumed GIC interest at the same 2.99% $817.20
    Net interest = $1948.26
    Sometimes we tend to forget that the investment is earning interest on the other side and at the end you will have money in your pocket.
    Many people can only save if they “force it” .. thus you have your RSP loans every year. Ask a banker how busy they are in Feb and March doing forced savings. A bank makes little or no money on these loans which are available to most. They generally charge Prime rate. remember these loans are charged on a reducing balance whereas the investment remains constant from the beginning.
    I dont think Lendit is a bad deal at all.
    Folks must remember that not all credit functions are reported to the Credit Bureau and that goes for most Pre paid Credit Cards.
    I say again no beacon score no mortgage !
    LL

  11. Hi Lorilee,
    Glad you made the distinction between secured credit cards and pre-pays. I have a Home Trust VISA and a People’s Trust MasterCard. Both report to the credit bureau, and my Beacon score is 638 even though I am still paying out a Consumer Proposal (not that I’m looking for new credit!).
    The Lendit loan may be a good deal for some. To tell you the truth, it was that photo of a “fist-fulla-dollars” that really offended me. However, Michael W says it has been removed, and that’s good.
    Best wishes,
    ~Wendy

  12. I tend to agree. Others have asked me about the Lendit loan and I was negative about it, partly for the reasons I stated above, and partly because I was not sure how it would actually affect one’s credit rating. For instance, I’ve heard that “household finance loans” (from places like TransAmerica, CitiFinancial and HFC) can actually negatively affect a credit rating even if paid responsibly, because they are a type of credit used by those in financial distress.
    Best wishes,
    ~Wendy

  13. Wendy I think you’re confused. As far as I know, Lendit is a secured investment loan. It is nothing like a high-risk subprime loan. Investment loans reflect very positively on your credit, assuming you pay on time!
    Lior, A lender is mostly concerned with payment consistency and trade size. For example, if you pay a $5,500 investment loan on time every month for two years, that reflects better than paying a less frequently used $1,500 secured credit card on time.

  14. YChan,
    I have to disagree. I’ve personally been told by certain lenders what they prefer to see on the report as far as re-established credit goes.
    The logic for loans is that it’s a fixed amount that’s paid every month, most of the time arising from a necessity, for example, a car loan to have a car to get to work. While it’s a useful addition to have on the credit profile, lenders want to see fluctuating balances that are handled responsibly.
    A “less frequently used card” is better for the consumer in two respects:
    1) It’s a revolving facility with a fluctuating balance
    2) It shows the client isn’t dependent on credit by keeping the utilization low
    3) They save on interest costs (keeping utilization low = easier to pay off balance in full = little or no interest costs)

  15. @Lior,
    How is a secured credit card “most efficient” from “both time and cost?”
    Secured cards are more expensive than $300 over 3 years. They also take more time than installment loans because you have to actually charge things on them and manually make payments of different amounts each month. Plus the interest rate is sky high if you carry a balance.
    For my money, Lendit is a better value.

  16. From our substantial experience in assisting consumers across Canada improve their finances if your primary goal is to qualify for a mortgage with less than 20% equity, the mortgage insurers are looking for new installment AND revolving credit that was obtained after a bankruptcy was discharged (or credit counselling or consumer proposal completed) Important that the credit is reported and ideally to both credit bureaus.

  17. Lendit financial is NOT reporting or being posted on the Equifax bureau at this time which is the whole point of me setting up an account with Lendit. Lendit blames equifax, equifax is blaming lendit but at the end of the day, Im not getting my payments which I NEED to have reported to Equifax in order to rebuild my credit. If rebuilding your credit is the goal and you need it reported on equifax as opposed to trans union ( trans union is the lesser of the 2 credit bureaus ) then lendit is NOT the way to go at this time until they somehow get their crap figured out with equifax credit bureau.

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