Lendumo Loans Review: Exploring the Benefits and Drawbacks

Are these high-interest tribal loans really worth the risk? With rates often exceeding 700% APR, Lendumo provides an option for those with poor credit – but at an extraordinarily high cost that has trapped many borrowers in cycles of debt.

This Lendumo Loans Review covers:

• Eligibility
• Loan amounts and terms
• The application process
• Advantages and disadvantages
• Alternatives to consider

What is Lendumo?

Lendumo, formerly known as Amplify Funding, is an online tribal lender based in Wisconsin, US. The Lac du Flambeau Band of Lake Superior Chippewa Indians are the sole proprietors of the company, dedicated to offering swift credits and enhancing the accessibility, efficiency, and convenience of the lending process.

They define themselves as a higher-priced option for borrowing, stressing that loans are best reserved for emergencies and shouldn’t be relied upon as a prolonged fix for financial challenges.

While Lendumo may provide an option for those with poor or no credit history, potential borrowers must understand the terms and costs of any loan before committing to it. The interest rates are exceptionally high, so it’s critical to have a plan to pay back a Lendumo loan as quickly as possible to avoid ballooning interest charges.

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Eligibility Requirements

To apply for a loan from Lendumo, you must meet the following criteria:

• You must be at least 18 years old or the state minimum age, whichever is higher.
• You need to be a U.S. citizen or permanent resident.
• You must have a regular source of income and an active checking account.
• You cannot be an active member of the U.S. military or a dependent of someone serving, as Lendumo loans exceed the 36% APR cap set by the Military Lending Act.
• You cannot already have an outstanding loan with Lendumo/Amplify Funding.
• Your credit score must typically be at least 300 or higher.

While Lendumo caters to those with poor credit histories who may not qualify elsewhere, they still have some baseline requirements around age, income, banking status, and not having an existing loan with them.

The good news is they don’t strictly require a credit check, which can benefit those with no credit or previous blemishes. But you do need to prove you have a steady paycheck coming in and a way for them to withdraw payments from your checking account.

Loan Amounts and Terms

Lendumo provides fairly small loan amounts compared to many other personal loan lenders. For first-time borrowers, the maximum is $1,000-$1,500. Returning customers who have successfully paid off a previous Lendumo loan may be able to borrow up to $2,500.

The loans are structured as short-term installment loans, not traditional payday loans where the full amount is due with your next paycheck. However, the repayment periods are still very brief compared to standard personal loans.

Most Lendumo loans have terms of just a few weeks to a few months at maximum. You’ll typically have bi-weekly or monthly payments deducted from your checking account on an automated basis.

For example, if you borrowed $1,000, you may have anywhere from 6 to 18 bi-weekly payments of a few hundred dollars each time. The shorter the loan term, the higher those bi-weekly payment amounts will be.

While the fast repayment schedules may seem appealing, they make it very difficult for many borrowers to pay off their entire Lendumo loan principal and extraordinarily high interest charges in that short time period. This often results in customers re-borrowing or rolling over their loans and paying tremendous additional interest.

Interest Rates and Fees

Lendumo is very upfront that their loans come with extremely high interest rates, describing them as an “expensive form of borrowing.” However, they do not disclose their typical interest rate ranges until after you have applied and been approved for a loan.

From customer complaints and reviews, it appears Lendumo’s interest rates frequently fall between 400-800% APR. This means you could end up repaying 3-5 times the original loan amount or more by the time interest is factored in.

For example, if you borrowed $500 at a 700% APR, and your repayment term was 6 bi-weekly payments of $200 each, your total repayment would be $1,200 on just that $500 loan.

In addition to the high interest charges, Lendumo also charges fees that can add significant costs, including:

• $30 fee for payments that are more than 3 days late
• $30 non-sufficient funds fee if a payment bounces

On a small $500 loan, a $30 fee represents 6% of the total principal. These fees get rolled into your remaining loan balance as well.

No matter how enticing the fast cash may seem, it’s critical to understand the true costs of a Lendumo loan up-front so you can calculate if it fits your budget and repayment capabilities before accepting.

Prepayment Penalties or Fees

Lendumo does not charge any prepayment penalties or fees if you want to pay off your loan early. In fact, they encourage borrowers to take advantage of their penalty-free early payoff policy.

Paying off a Lendumo loan as quickly as possible is highly advisable, as it can save you a tremendous amount of money in interest charges. The longer you take to repay one of their high-interest loans, the more those interest fees will accumulate.

For example, if you borrowed $1,000 at a 700% APR with bi-weekly payments of $300, your total payback amount would be around $4,500 if you stuck to the full repayment schedule. But if you managed to pay it all off after just the first two payments of $600, your total interest paid would only be around $200.

So while the option to prepay without a penalty is a pro for Lendumo, it really just underscores how crucial it is to pay these expensive loans off as an absolute emergency solution – not something meant to be paid back on a longer-term installment basis.

The quicker you can repay the principal borrowed and stop accruing high interest charges, the better off you’ll be financially. But with the brief repayment schedules and high payment amounts, that’s easier said than done for many Lendumo borrowers based on customer complaints.

The Application Process

Lendumo aims to provide a simple and fast application process for prospective borrowers. The entire application process is designed to be completed online or over the phone with a representative. Lendumo does not have any physical branch locations you visit.

Here are the key steps involved:

• Online Application: Everything starts by filling out a short loan application on Lendumo’s website. You’ll need to provide some basic personal and financial information like your name, address, income details, and banking account numbers.
• Approval Decision: Once you submit the online application, Lendumo’s underwriting system will quickly analyze your information and creditworthiness. Many applicants receive a decision within minutes. If approved, you’ll be shown the loan amount, fees, interest rate, repayment schedule and other terms for your specific loan offer. This is the crucial stage to review and ensure you understand the total cost before electronically signing the loan agreement.
• Provide Documentation: After e-signing, Lendumo may request additional documentation from you to verify details like your identity, income, banking information, etc. This is standard for online lenders.
• Receive Funding: If everything checks out, Lendumo will initiate an electronic transfer of your approved loan amount directly into your checking account. Many borrowers report receiving funds as soon as the next business day after approval.

Advantages of Lendumo Loans

Fast and Convenient Funding: One major pro that shows up consistently in Lendumo reviews is how quickly they are able to get funds to approved borrowers. Many customers report having the money deposited directly into their bank account within just 24-48 hours after completing the online application and approval process.

Accessible for Bad Credit: With their lenient credit score requirements and willingness to lend to those with poor or no credit history at all, Lendumo provides an accessible source of cash for borrowers who may struggle to qualify elsewhere. As one reviewer put it, “Lendumo was able to help me when other lenders turned me down due to my low credit scores.”

Simple Application Process: Customers frequently praise how easy and streamlined Lendumo makes the loan application compared to more traditional lenders. Reviews describe the online application as “succinct,” able to be completed quickly, and not requiring excessive documentation or paperwork.

Helpful Customer Service: While there are plenty of complaints about the high rates, multiple Lendumo reviews commend their customer service representatives as being “professional,” “knowledgeable,” and patient in walking borrowers through the process step-by-step over the phone.

No Prepayment Penalties: A positive that Lendumo advertises is their no-fee policy for repaying loans early. Reviewers who could find a way to pay off their total balance ahead of schedule appreciated not incurring any extra penalties or charges for doing so.

Disadvantages of Lendumo Loans

Extremely High Interest Rates: By far the biggest grievance aired in Lendumo reviews is their exorbitant interest rates that can reach 700% APR or higher in some cases. Many borrowers express feeling misled and shocked when their total repayment amounts ballooned to double, triple or even quadruple the original loan principal due to such astronomical interest charges.

Potential for Predatory Lending: Related to the interest rate issue, several reviews accuse Lendumo of predatory or unethical lending practices. They cite not being upfront about the true costs until after signing the agreement or not providing clear documentation with the terms spelled out. There is a common feeling of having been trapped or taken advantage of due to difficult financial circumstances.

Short Repayment Timelines: A number of negative reviews mention struggling to repay their Lendumo loans according to the short repayment schedules, which often require bi-weekly payments over just a few weeks or months. Reviewers indicate the high payment amounts on such a compressed timeline made it next to impossible to settle the total principal and interest owed.

Escalating Balances Despite Payments: Alarmingly, some borrowers claim that even after making scheduled payments, their outstanding Lendumo loan balances somehow continued escalating rather than being paid down as expected. This suggests interest was compounding improperly or extra fees were being tacked on without clear justification.

Poor Default Experience: For those who fell behind on their high Lendumo loan payments, the reviews report accounts being quickly sent to debt collectors, credit scores getting severely damaged, and no real options or restructuring programs being offered despite their hardship circumstances.

Impact on Credit Score and Reports

Here’s how taking out and repaying (or not repaying) a Lendumo loan can impact your credit scores and reports:

• Potential Credit Score Increase: Like most lenders, Lendumo does report your loan account history and payment activity to the major credit bureaus – Experian, Equifax, and TransUnion. If you successfully make all your bi-weekly or monthly payments on time, this positive payment history can actually help improve your credit scores over time by adding to your positive payment history. However, any credit score increase may be relatively modest given the brevity of Lendumo’s loan terms. Building credit optimally requires demonstrating consistent on-time payments over a longer period.
• Credit Score Damage from Delinquencies: The flip side is that if you start missing payments or go into default with Lendumo, your once-positive tradeline can very quickly turn into a delinquent debt on your credit report. Payment delinquencies of 30 days or more can severely ding your credit scores, and the impact worsens the longer you go without paying. Some reviewers report plummeting credit scores soon after their Lendumo account was sent to collections for non-payment.
• Credit Inquiries from Application: Additionally, Lendumo does pull your credit report as part of the application process, which results in a hard inquiry being recorded on your credit report. While this entry alone is unlikely to drastically impact your scores, too many hard inquiries from applying to multiple lenders can cause concerns.
• Collection Accounts Remain: Finally, even if you eventually repay or settle a debt sent to collections, that negative collection account tradeline can remain visible on your credit reports for up to 7 years from the original delinquency date.

Should You Consider a Lendumo Loan?

The extremely high interest rates and numerous customer complaints suggest that Lendumo loans should truly be viewed as an option of absolute last resort when all other potential funding sources have been exhausted. The “easy” fast cash comes at an extraordinarily high price.

Before agreeing to a Lendumo loan, it’s critical that you take the time to calculate and understand the full repayment costs including interest and fees – not just the bi-weekly payment amount. Some reviewers felt blindsided when their total ballooned far beyond the principal.

Given the short repayment timelines, budget tightly to ensure you can responsibly make all those high bi-weekly or monthly payments and ideally pay it all off as quickly as possible before interest charges accrue further. Defaulting can severely damage your credit.

Look into alternatives like payment plans with creditors, payday alternative loans from credit unions, local nonprofits offering microloans, or even more affordable installment loans. Exhaust these before resorting to a loan with rates that may exceed 700% APR.

Alternatives to Lendumo

If the high costs and risks of a Lendumo loan give you pause, it’s wise to explore some alternative options first. Ultimately, just about any financing source – even those with high interest rates – may be the lesser of two evils compared to Lendumo loans if you’re unable to realistically repay on their condensed schedules before interest causes your debt to spiral out of control.

Personal Loans from Banks/Credit Unions: Borrowers with decent credit may qualify for a traditional personal loan from a bank, credit union or online lender. These typically provide much lower interest rates compared to Lendumo, as well as longer repayment terms that can make the monthly payments more affordable.

Payday Alternative Loans (PALs): Many credit unions offer “payday alternative loans” which are designed to be a cheaper option than payday or tribal lenders like Lendumo. PALs cap interest rates at 28% and application fees at $20 for loan amounts up to $2,000.

Non-Profit Lenders/Lending Circles: Organizations like credit counseling agencies or other non-profits may be able to connect you with sources of low/no-interest microloans or “lending circles” where members pool funds to borrowers in need.

Payment Plans with Creditors/Providers: When faced with an expense like high medical bills or utility payments, directly reaching out to the provider is often preferable to a high-interest loan. Many may be willing to set up payment plans or grant financial hardship discounts.

Credit Card Advances: As suboptimal as it sounds, getting a cash advance from an existing credit card may work out less expensively than the triple-digit APRs from Lendumo, especially if you can pay it back quickly before interest compounds.

Friends/Family Loans: While uncomfortable, borrowing from close friends or family interested-free can be a preferable option to predatory lenders, assuming you can agree on clear terms and have a way to pay them back.

Conclusion

Lendumo loans should only be considered as a literal last resort after all other options have been thoroughly exhausted. The extremely high triple-digit interest rates, short repayment timelines, and numerous reports of predatory lending practices mean borrowers risk quickly becoming trapped in unmanageable debt cycles that can severely damage their finances and credit scores for years.

While Lendumo provides an option for those shut out from traditional lenders, the costs and risks of their expensive loan products are so extraordinarily high that more affordable or patient alternatives like credit union loans, payment plans, non-profit lenders, or even credit card advances should be prioritized first whenever possible.

Only those with no other recourse who can realistically repay a Lendumo loan principal within a couple of payments should cautiously proceed – the rest are better off avoiding these debt traps.

Frequently Asked Questions