Lending Club Corp. is lowering its person-to-person loan rate to better compete with credit cards.

Borrowers and investors come to the Redwood City, Calif., online loan facilitator's website to request and fund loans to one another.

For borrowers, the advantage is they could possibly get a better rate than they would from a conventional bank, whereas investors could get a higher return than they would through other investments.

Although Lending Club's rival, Prosper Marketplace Inc., allows participants to set their own rates in an auction-style process, Lending Club controls the rate for loans on its site.

It tweaks this rate to adjust the supply and demand for loans — a lower rate attracts more borrowers, whereas a higher rate attracts more investors.

Lending Club said Tuesday that its three-year loans can be obtained for an annual percentage rate of as low as 6.78%, which it said makes it a good alternative to spending on credit cards.

Its prior rate was 7.93% at its lowest end.

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