Lendumo review: Small loans with expensive terms

Pros

• Potentially fast fundingnNo prepayment penalty

Cons

• High interest rates — and not upfront about the range you might facenLate payment and insufficient funds feesnNot available in all states

What you need to know about a Lendumo personal loan

Lendumo, formerly called Amplify Funding, is an online lender that provides short-term loans for small loan amounts. The company is based in Wisconsin and is a tribal lender run by the Lac du Flambeau Band of Lake Superior Chippewa.

Lendumo offers loan amounts of up to $1,500 for first-time borrowers and up to $2,500 for repeat borrowers. Unlike typical payday loans, Lendumo personal loan repayments aren’t due by your next paycheck. Instead, they’re structured as installment loans, which are paid back over a series of weeks or months.

Expensive loan terms

Like payday loan lenders, Lendumo lends in small amounts and targets its loans at people who may have limited financing options. The company encourages people with bad credit or no credit to apply.

But you’ll pay for that with expensive loan terms. In the fine print on its site, Lendumo describes its loans as an “expensive form of borrowing.” Another clue that its rates are high: Lendumo will not lend to active military members — a strong indicator that its loans exceed the 36% interest cap set by the Military Lending Act to protect people in the military from predatory lending. 

Just how high are Lendumo’s rates? While they say they’re “expensive,” Lendumo unfortunately doesn’t provide information on its range of rates until after you’ve submitted a loan application.

This makes it critical for approved borrowers to carefully review the terms of their Lendumo loan agreements before deciding to sign. Take a look at this chart to get a sense of how much money you could pay for a short-term $500 loan depending on the annual percentage rate, or APR.

Image: plploansinterestchart-1

Fees for late payments and insufficient funds

Lendumo charges a $30 fee for payments that are more than three days late. A $30 fee will also be charged if a payment is returned due to insufficient funds or isn’t honored by your financial institution for any other reason.

For small loan amounts, these fees are significant. On a $500 loan, for example, a $30 fee would equal 6% of your loan principal. And, remember, these fees are in addition to whatever interest rate is being charged on the loan.

If you can’t make a payment for any reason, you can contact Lendumo to request a three-day courtesy extension. If you’re about to receive a paycheck or other income, this extension could help you avoid a late payment or insufficient funds fee. But note that the courtesy extension can only be used once during the life of your loan.

Potentially fast funding

Lendumo says it has a fast application, approval and funding process, with most approved applicants receiving their funds in their bank account by the next business day — an important factor when you need fast cash to cover an emergency expense.

But to qualify for next-business-day funding, you’ll need to receive loan approval before the cutoff time of 6 p.m. Central time Monday through Friday. If you’d like to receive your funds on the same day, you can request a wire transfer up to the cutoff time of 3 p.m Central time, Monday through Friday. (And keep in mind that depending on your bank, there may be a wait before you can access your cash.)

No prepayment fees

You can pay your Lendumo loan back in full at any time without penalty.

Paying your loan off early could save you a lot of money in interest charges and help you avoid getting into a cycle of debt. And with no prepayment penalties to worry about, it makes even more sense to pay back a Lendumo personal loan as quickly as you can.

A closer look at a Lendumo personal loan

Here are a few more details to consider if you’re thinking about applying for a loan from Lendumo.

• Eligibility — To borrow from Lendumo you must be a U.S. citizen, have a checking account and a regular source of income.
• Rewards — Lendumo customers earn “U Rewards Points” that they can redeem for gift cards.
• Availability — Lendumo doesn’t currently lend to people who live in Arkansas, Connecticut, New York, Pennsylvania, Vermont, Virginia, West Virginia or Wisconsin.

Should I get a Lendumo loan?

Lendumo loans are unsecured, meaning they don’t require you to put up collateral — like a car or other personal property — to secure your loan. An unsecured loan could be a better choice than secured loans like title loans or pawn shop loans, which put you at risk of losing your car or other property.

But generally, Lendumo should be considered a last resort. You’ll likely face a very high interest rate, so it’s important to consider all of your other options. Negotiating a payment plan or even delaying payment on a bill may be a better choice than taking out a high-interest loan.

You also may want to consider applying for a payday alternative loan, or PAL. This type of loan, offered by some federal credit unions, caps interest rates at 28% and application fees at $20.

Whether you have good credit or bad credit, you’ll want to do some shopping to compare rates and terms for personal loans from banks, credit unions or online lenders.

If you do take out a loan from Lendumo, try to pay it off as soon as possible since you won’t face a prepayment penalty.

How to apply with Lendumo

To apply for a Lendumo loan, you’ll need to be a U.S citizen who is at least 18 years old, have a checking account and regular income, and live in one of the 42 states where Lendumo operates. Active military members (and their dependents) aren’t eligible to apply.

You can apply for a Lendumo loan online. You’ll need to submit the full application to view your potential rate.

If your application is approved, you can review and e-sign your loan agreement online. You’ll also need to call Lendumo to provide verbal verification of your information.

Not sure if Lendumo is right for you? Consider these alternatives.

• Dave: For a membership fee of $1 per month, members of the Dave app can request interest-free cash advances of up to $250 to cover small emergency expenses.
• OppLoans: OppLoans also has high interest rates — but its maximum loan amounts are a little higher than Lendumo’s.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.