If you've ever tried to buy a house, a car, or any purchase that required a loan, then you know how tedious the work can be.
Aside from the mountains of paperwork, the actual loan process is immensely time consuming and mentally draining.
It's the last thing you want to do after spending eight hours at the office, or worse, on a beautiful, sunny weekend.
That's where LendingTree comes in.
The company aims to make the entire process — from searching for a lending company, to qualification and loan application — as simple as it can possibly be by providing borrowers with a loan marketplace.
Whether LendingTree succeeds in this or not is what we set out to discover.
Who is LendingTree?
LendingTree is a peer-to-peer lending network founded in 1996 by an accountant named Doug Lebda who had become fed up with the process of seeking out loans.
Doug needed a mortgage, but the process of finding one seemed impossible, even for a man who spent his entire day working with finances.
Though the company started in 1996, it didn't launch nationally until 1998 when LendingTree.com was established and the headquarters were based in Charlotte, North Carolina.
After the well-known "When banks compete, you win" campaign launched in 1999, the company saw a successful IPO in 2000.
LendingTree came onto Barry Diller's radar in 2003, and shortly after the company was acquired by InterActiveCorp.
This acquisition helped establish LendingTree as an even more reputable company by placing it alongside Ticketmaster, Ask.com, and other leaders in their respective industries.
After the housing market crashed in 2008, LendingTree left AIC and joined forces with Tree.com, gaining a portfolio of "financial matchmakers" to offer its customers.
Today, the company has rebranded itself once again as LendingTree and offers additional online loan search services for education, home professionals, and automotive loans.
What's the purpose of LendingTree?
LendingTree was created to provide consumers with an easy-to-use way of learning about potential loans, all from the comfort of their home.
It aims to eliminate the tiring process of going from bank to bank and lender-to-lender to find the best deal.
By making lenders compete for business, LendingTree is able to offer its customers a choice between multiple loan offers and switch the position of power from lender to borrower.
And LendingTree does this for free.
Who are the lenders?
LendingTree has partnered with 1,570 different lenders that include Capital One, North American Savings Bank, Citizens Bank, and many more.
However, you should note that these lenders pay a fee to LendingTree for your information.
The major lenders throughout the country aren't likely to pay for information they can obtain freely, so the companies that partner with LendingTree are sometimes smaller operations that are desperate for business.
However, several leading lending institutions have partnered with LendingTree.
LendingTree opens its doors to any lender that wishes to apply, but not all make the cut.
In order to protect its borrowers, LendingTree vets each lender and runs them against an anti-fraud database to ensure there are no reports or red flags.
If you wish to learn more about the lenders, a full list can be found on their lender reviews page.
From here, you can sort by lender type, state, ratings, and more.
How LendingTree Works
Simply asking, "How does LendingTree work?" isn't enough, as the question has multiple facets that come into play.
Let's break it down into the different components.
How LendingTree Makes Money
To understand how LendingTree makes money, you must first understand how lenders make money.
A mortgage lender, for example, will charge you an origination fee — a small percentage of the loan amount that you pay upfront.
There are also other fees that come into play like closing costs, transaction fees, etc.
Lenders also earn revenue from interest payments, which is one reason many people become stuck in credit card debt.
When they only make the minimum payment, they can't reduce their overall principal and the credit card continues to profit from them.
LendingTree provides its services for free to borrowers; the profit originates in how the company provides your information to potential lenders.
Because many of the lenders are not major, national companies, there can be a scarcity of borrowers.
The lenders are willing to pay for leads.
After you fill out the sign-up form and enter your personal information, LendingTree matches you with four or five potential lenders that its algorithms think are the best match for you.
The company then sells your information to these lenders (and can potentially profit up to five times from a single customer.)
Services Offered by LendingTree
Since its inception, LendingTree has branched out to offer a wide range of services including business and personal loans.
However, their four main foci — and ours — lie in automotive loans, education loans, mortgages, and lines of credit.
Although LendingTree offers automotive loans, the nomenclature may be a bit misleading.
In addition to standard auto loans, LendingTree also offers loans for auto refinancing, auto insurance, as well as motorcycle, RV, boat, and powersport vehicle loans.
The service includes a loan calculator to help you determine how much you would likely pay per month for these loans.
A series of tips at the bottom of the page provide access to a wealth of knowledge concerning the different types of loans.
For instance, these articles explain what to expect when using a motorcycle loan, what lenders look for, the different types of motorcycle loans, and what the process will likely be like at the dealership—all valuable information for the inexperienced.
Much like the automotive loans, LendingTree provides an easy way to receive multiple student loan offers.
All you have to do is enter the name of your school, the loan amount you need, your expected graduation year, and an email address.
In addition to student loans, you can find loan refinancing options to help lower your interest rate.
There is a knowledge base with this section that explains the different loan terms and helps students understand exactly what it is they're signing up for.
Common terminology like debt-to-income ratio, borrower, annual percentage rate, and more are explained in easy to understand ways.
LendingTree also makes a note at the bottom that lenders aren't going to deny students based on poor credit, as the majority of students borrow money for education.
Mortgages are the most sought after type of loan on LendingTree.
After all, the company began primarily as an online mortgage lending marketplace.
In addition to connecting borrowers with lenders, LendingTree provides you with tools to look for refinancing, home equity loans, VA loans, FHA loans, and reverse mortgage loans.
Articles below the loan options explain what you should do before you apply for a mortgage loan, how to determine the length of the mortgage, what sorts of charges to expect, and which kind of loan would best fit your situation.
Even if you're looking for a credit card instead of just a loan, LendingTree can still help.
You select from four different credit rating categories (excellent, fair, poor, or new to credit) and then filter by card type, card issuer, and card network.
The tools allow you to search for the best type of card for your needs, and to see at a glance what the intro APR is, how long the intro APR period lasts, and what the intro balance transfer fee is.
For cards that provide miles or cashback, you can easily see the amount you'll earn per dollar spent, the annual limits, and any fees you may have to pay before you begin to look at each card's specifics.
LendingTree checks your credit score before providing sending your information to lenders (although this doesn't appear on your report).
As a result, the company can provide you with your current score.
After all, a higher credit score makes you more appealing to lending institutions.
How to Use LendingTree's Services
The first step is to create an account with LendingTree.
This can be done after filling out the application form available on their website.
The process is simple.
For the sake of example, we filled out the application form for a mortgage loan, but the exact questions may be different depending on the type of loan you need.
- What type of loan do you need?
- What type of property is the loan for?
- What is the use of the property?
- What state are you in?
- What city are you in?
- Have you found your new home yet?
- Are you working with a real estate agent?
- What is the estimated purchase price of your home?
- How much money do you have available for a down payment?
- Do you need help moving?
- What is your estimated credit rating?
- What is your date of birth?
- Are you active or retired military?
- Have you declared bankruptcy in the past seven years?
- Do you have any foreclosures?
- What is your street address?
Finally, it asks for a username, password, and email address to set up your LendingTree account.
From there, the company's algorithms get to work matching you with potential lenders.
Users have reported receiving phone calls and emails almost immediately upon hitting the "submit" button the form.
Is LendingTree user friendly? Are the services easy to use?
It's aesthetically pleasing and rather intuitive to fill out.
The company also provides a phone number (1-800-813-4620) if you need help or would prefer not to enter personal information online.
Of course, "user-friendly" is subjective.
While users report immediate results, there have also been multiple complaints that the results just don't stop.
Borrowers have found a lender to work with quickly, but still receive competing offers for months after submitting.
The major complaint about LendingTree from most users was the nearly overwhelming number of phone calls and emails they received after signing up for the service.
Our suggestion is to use a dedicated email address for LendingTree.
Don't mix your personal or business email, as it will almost certainly become inundated with offers.
If you can afford to purchase a disposable phone, use that number rather than your personal number.
That way, once you've found the offer you want to go with, you can simply turn the phone off and avoid the headache.
LendingTree's Customer Service — The Good, the Bad, the Ugly
One of the most telling traits of a company is how effective their customer support is — and how many ways the company provides a customer to get in touch.
In that respect, LendingTree scores high marks.
Not only does the company provide a customer care phone number, but they also provide a form submission, an address if you prefer to write snail mail, and two separate email addresses.
A vast majority of user reviews praised the customer support team and their helpfulness.
One user mentioned that she didn't qualify for the loan she wanted; after informing LendingTree of this, the company immediately provided her with other options that helped her find a loan that fit her specific needs.
Whenever negative reviews arose, LendingTree could be seen in the comments section reaching out to users and providing solutions.
Whenever LendingTree was clearly in the wrong, the company took responsibility for it.
That's a quality not often seen in major companies.
Of course, with any financial company, there will be downsides.
As we've already established, LendingTree provides lenders with your information—they don't deal directly with the lending process.
This means that a certain breakdown in communications is possible, and if you begin receiving an inordinate number of phone calls, there's not much LendingTree can do about it.
You can request they remove your phone number from their databases, but if the calls are the result of one of the lenders leaking your number to affiliate companies, you're out of luck.
All in all, LendingTree's customer service is one area of the company we could find almost nothing wrong with.
Is LendingTree safe and legitimate?
Since the start of the internet, keeping your personal information to yourself has been pro forma. Websites like LendingTree go against everything most internet users hold dear, in that sharing financial information and (gasp!) even your social security number is a major no-no.
It's natural that you might be a bit skeptical about the validity of LendingTree.
Determining whether the website is legitimate and safe are two separate issues, however.
"Safe" implies that you won't have your identity stolen or grant access to your accounts by placing information on the site, while "legitimate" questions whether the services work as promised.
Let's start with safe.
First of all, LendingTree employs various encryption techniques to protect data transfer.
From their Security page:
“Transmissions between LendingTree, banks, lenders, loan brokers and real estate professionals are encrypted using public key cryptography algorithms with a minimum key size of 128 bits.”
In non-technical jargon, this means that your data is protected by a lock with at least 128 tumblers.
If you've ever tried to pick a lock, you know how difficult a six-pin tumbler can be.
LendingTree is twenty-two times more difficult to "pick" digitally.
In addition, any page that requests personal information from you uses HTTPS, a secure layer of communication that prevents anyone from viewing the information.
These pages also use Secure Socket Layer (SSL) technology.
This technology scrambles the data, which means that even if someone does steal it, they can't decode the information contained within.
Only the recipient of the information with the proper decryption key (LendingTree in this case) can view it.
LendingTree is transparent in regard to data collection.
Information We Collect.
We collect personally identifiable information that can identify you such as your name, address, telephone number, mobile number, e-mail address and Social Security Number ("Personally Identifiable Information" or "PII").
We also collect information such as demographic data and data about your online activity on our website that does not identify you ("Non-Personally Identifiable Information" or "Non-PII").
PII and Non-PII are known together as "Information".
We may also collect and store Information that you provide to us about other people (such as co-borrowers), including their name, address, telephone number, mobile devices, email address and Social Security Number."
The company collects this data from the information you personally provide; from sources such as credit reports, public information about your home, and demographic data; and from automatic collection cookies and other technology.
Of course, one of the main areas of concern is whom LendingTree will share this information with.
The company promises to only share the information with the relevant service providers: LendingTree businesses, lenders or matching service providers; real estate agents, brokers, and real estate companies; referrals for your non-mortgage business; and services providers.
There is one warning that stands out and raises concern: "BE AWARE that the Lenders with whom you are matched may retain or use your Information whether or not you use their services and you should contact these Lenders directly concerning their privacy and information sharing practices which may differ from LendingTree."
So, is LendingTree safe?
Yes. The company isn't some no-name web startup that no one has ever heard of.
You've probably seen the commercials on television before.
But is it legitimate? Read on.
Different people define legitimacy in different ways.
If your only concern is whether or not LendingTree's services actually work, then the answer is yes.
The service connects you with multiple lenders and provides you with offers almost from the start.
On the other hand, take the stance of the buyer beware.
LendingTree does sell your personal information to potential lenders, and then their role stops there.
That said, LendingTree employs more than 300 employees as of 2016, as a NASDAQ stock ticker (TREE), and trades stocks at over $100 a share.
That's the mark of success.
Lending is both safe and legitimate, and the service does work. That is a fact you can be sure of.
According to Consumer Affairs, LendingTree scores a 3.8 out of 5 rating, with 5-star ratings making up 35% of all reviews.
Customers are satisfied with LendingTree's ease of use, the convenience, and the finance choice options.
The customer service also stands out as a strong point for the company, resulting in an overall positive experience for the vast majority of visitors.
LendingTree connects you with multiple lenders and service providers, each of which can then offer multiple options for loans, refinancing, and more.
There are no upfront fees associated with LendingTree, and the service itself is completely free.
LendingTree works even for those with poor credit and works to match you with lenders who specialize in credit repair.
There are an overwhelming number of educational resources to help you learn more about loans, lenders, repayment terms, and anything else you may not be completely comfortable with.
No company is perfect. Some of the main complaints users had about LendingTree include:
Users received multiple calls from multiple institutions in the period from immediately after sign up to long after they had deactivated their account.
As stated above, this is because LendingTree sells your information to the providers; to put a stop to these calls, you would need to speak with that specific lender, although multiple users have reported doing so to little effect.
Users complained that certain personal information was distributed that they did not want shared, but later discovered that it had been spread anyway.
One of the major weak points in LendingTree's service is once you connect with a lender, LendingTree is no longer your point of contact.
The majority of complaints were not about LendingTree's service or website, but about the lenders and their incessant contact.
Many of the offers may not be the most competitive; as we mentioned above, if a loan company has to pay a fee for leads, they are likely unable to provide the same level of service as national lenders.
This means your interest rates and loan amounts may not be as favorable.
Will LendingTree ruin my credit score?
The institution is quick to state:
LendingTree pulls your credit report when you complete a loan request. LendingTree's inquiry does not count towards your credit score nor does it show up on your credit report to anyone but you (emphasis mine.)
However, even if LendingTree's inquiry doesn't count towards your score (a soft check), other institutions may perform their own check.
The FAQ page from LendingTree goes on to explain:
Each lender has their own policy about pulling your credit. Some may pull your credit before they make you a loan offer; others may pull your credit after you have accepted their offer. In all cases, LendingTree pulls your credit report when you complete a loan request.
Because the business model of LendingTree is to provide three to five lenders with your information, that can mean three to five "hard" checks, each of which can potentially lower your credit score by three to ten points.
While FICO considers multiple credit checks within a given period (and under the right circumstances) to be only one check, a customer has to accept an offer before that period expires or the checks will affect their credit score.
If you do find a hard inquiry on your report that you didn't authorize, there are multiple steps you can take to have it removed.
First, contact the company that made the inquiry and ask them to prove you made an inquiry, then report to the major credit reporting unions (Experian, EquiFax, and Transunion) that it was an error.
You can also contact the credit bureaus directly and dispute the inquiry yourself.
Even if it is removed from one, however, you'll need to reach out to the others.
The bureaus have a tendency not to communicate with each other.
Frequently Asked Questions
- Does LendingTree vet the lenders that they work with?
- Once I have been approved by a lender, do I still have time to change my mind and go with someone else?
Yes. You are not obligated. You can change your mind and go with another lender.
- How safe is my information that I have provided to LendingTree?
LendingTree is secured, but you will receive offers from many lenders that your information was sold to.
- How does LendingTree make money if the services are free to use?
Lenders pay LendingTree for your business.
- What happens if a lender that I was connected to via LendingTree turns out to be a scam?
You should start by contacting LendingTree and they will guide you through the necessary steps. If a blip shows up on your credit report, you should dispute the error.
The Verdict on LendingTree
The question remains: what to do about LendingTree?
It's an undeniable useful online loan marketplace, but there are downsides.
No one likes unsolicited phone calls, especially those that don't stop when you ask them to.
That said, the ability to receive multiple loan offers from various lending institutions without ever leaving the house can't be overstated, especially when you can apply for those same loans straight from your phone.
Would we recommend LendingTree? Under the right circumstances, for the right situations.
While most people are likely to go to known lending institutions for a loan, sometimes that doesn't work.
When that happens, try LendingTree.
The service puts you in touch with multiple lenders and multiple loan offers with a secure, safe service that's been vetted by thousands of customers in the past.