What we like:
Quick application process
|Rates (APR)||6.95% – 35.99%|
|Loan Terms||3 or 5 years|
|Loan Amounts||$2,000 – $40,000|
|Fees||Origination fee: 2.4% – 5%|
Prepayment penalty: None
Late fee: $15 or 5% of unpaid amount (whichever is greater)
Prosper was founded in 2005 and, along with LendingClub, was one of the country’s first peer-to-peer lending marketplaces. This means Prosper doesn’t issue its own loans but instead facilitates a connection between borrowers and individuals who wish to invest in their loans.
Borrowers apply for financing and receive loan offers which they can accept or deny. Individuals with Prosper accounts provide the funding for the loan at the agreed-upon terms.
In this review:
- An Overview of Prosper
- Applying for a Prosper Personal Loan
- Prosper Personal Loan Rates, Terms, Fees, and Loan Limits
- Benefits of Prosper Personal Loans
- Downsides of Prosper Personal Loans
An Overview of Prosper
Borrowers with Prosper repay loans on a set schedule. Loans can be used for virtually any purpose, including home improvement; debt consolidation; medical or dental expenses; starting a business; buying a vehicle; or paying off credit card debt.
>> Read More: Personal loan to pay off credit card debt
Borrowers make loan payments directly through Prosper, which facilitates the management of the loan. There are no prepayment penalties, but Prosper does charge an origination fee.
Prosper has facilitated more than $14 billion in loans to more than 870,000 borrowers, so it’s an established leader in the peer-to-peer lending industry.
Prosper could be a great lender for you if you’re looking for a loan at a competitive rate, especially if you don’t have an excellent credit score. But it’s important to understand the terms of the loan carefully to make sure a Prosper loan is right for you. This Prosper personal loans review will provide the insight you need to make an informed choice.
Applying for a Prosper Personal Loan
Getting a loan through Prosper is simple thanks to a quick and easy online application process. You can apply for a loan directly from Prosper’s website, and you actually have the option to check your rate before submitting a full application.
This is beneficial because you will not get a hard inquiry on your credit report when you check your rate, so your credit score won’t be affected. When you have too many hard inquiries on your credit report, your score can go down — and inquiries stay on your report for two years, so avoiding an unnecessary inquiry is important when shopping for loans.
When you apply online, you’ll need to provide details about:
- The amount you want to borrow
- Your Social Security number
- Your employment status
- Your income
- Current debts you owe and the payments you’re making on them
- Your monthly housing costs
Prosper will use your information to determine your debt-to-income ratio and overall creditworthiness, then process your loan application based on that data. Once you have been approved, you’ll receive offers for loans with either a three-year repayment term or a five-year repayment term, each with different interest rates. You can choose the one with the lowest rate or other terms that work best for you.
After you’ve accepted a loan offer, Prosper will deposit the loaned funds directly into your bank account via direct deposit. This process usually takes around five days. Prosper’s origination fee, which is between 2.4% and 5% depending upon your Prosper rating, will be deducted from the loaned funds.
You can use your funds for anything you’d like after the money hits your bank account. Once you’ve received the funds, you will need to begin repaying your loan on the agreed-upon terms. Your monthly payments will remain the same for the life of the loan and can be made directly through Prosper.
Prosper Personal Loan Rates, Terms, Fees, and Loan Limits
If you plan to borrow through Prosper, you’ll need to understand the annual percentage rate of the loan as well as the repayment terms you’re agreeing to. Here are the details of what you can expect with a Prosper personal loan:
- Loan APRs currently range from 6.95% to 35.99%. The APR is determined based on many factors, including credit profile, income, loan term, and loan amount.
- You can borrow between $2,000 and $40,000 with Prosper.
- You’ll have a fixed repayment term of either three years or five years.
- You’ll receive your loan proceeds within around five days of accepting your offer.
- You’ll pay an origination fee of 2.4% to 5%, depending upon your Prosper rating.
- There are no prepayment penalties. If you pay late, you’ll pay a fee equal to the greater of 5% of the unpaid amount or $15.
Benefits of Prosper Personal Loans
If you’re thinking of borrowing with Prosper, there are many benefits worth considering, including the following:
- A competitive APR: Prosper provides loans at reasonable rates for many borrowers. It’s APR range of 6.95% to 35.99% is almost identical to LendingClub’s APR range — and is below other personal loan companies such as Upstart, which offers loans at APRs between 7.74% and 35.99%.
- No prepayment penalties: You don’t have to pay a fee if you want to repay your loan early. This gives you the flexibility to become debt-free more quickly.
- You can qualify even if you don’t have a perfect credit score: Prosper’s minimum credit score to apply for a loan is 640, which is considered to be “fair” credit. Some competitors, such as LightStream, typically require better credit, with LightStream lending only to borrowers with a score of 660 or higher.
- You have a choice of repayment terms: You can repay your loan over either three years or five years. While a longer repayment term allows you to keep monthly payments lower so they’re more affordable, you’ll pay more in interest over time since you pay back interest for longer.
- You can use the funds for almost anything: While many people take out Prosper loans as debt consolidation loans, you can also use the money for a wide variety of other purposes including home improvement, buying a car, paying for school, making big purchases, or paying for your wedding.
Downsides of Prosper Personal Loans
While there are benefits to Prosper personal loans, there are also some downsides to consider:
- The maximum loan amount may not be high enough for some borrowers: While both LendingClub caps the amount you can borrow at $40,000, you may need additional funds. Other lenders, such as LightStream, allow you to borrow much more, with maximum loans up to $100,000.
- You’ll have to pay an origination fee. Since this fee could run as high as 5%, you could lose a big chunk of your borrowed money. LightStream and many other personal loan lenders do not charge origination fees to obtain financing.
- It takes five days to get your funding from the time you accept your loan offer. If you need access to cash right away, this may be too long for you to wait. You may need to consider a lender that can provide funds more quickly, such as Upstart which promises that 99 percent of applicants can obtain their money within just one business day after they’ve accepted their loan.
Bottom Line: Prosper Personal Loans Are a Great Choice for Many Borrowers
Prosper Personal Loans can be a great choice, both for borrowers with good credit and for borrowers who need a little more leeway in credit score requirements. With a wide range of APRs and a choice of repayment terms, Prosper provides the right type of financing for most would-be borrowers.
The origination fee is a big upfront cost that reduces the amount of funding you get, so be sure to comparison shop with the best personal loans to make sure a Prosper personal loan is the most affordable option for you after factoring in both rates and upfront costs.
* For example, a three-year $10,000 loan with a Prosper Rating of AA would have an interest rate of 5.31% and a 2.41% origination fee for an annual percentage rate (APR) of 6.95% APR. You would receive $9,759 and make 36 scheduled monthly payments of $301.10. A five-year $10,000 loan with a Prosper Rating of A would have an interest rate of 8.39% and a 5.00% origination fee with a 10.59% APR. You would receive $9,500 and make 60 scheduled monthly payments of $204.64. Origination fees vary between 2.41%-5%. APRs through Prosper range from 6.95% (AA) to 35.99% (HR) for first-time borrowers, with the lowest rates for the most creditworthy borrowers. Eligibility for loans up to $40,000 depends on the information provided by the applicant in the application form. Eligibility is not guaranteed, and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All loans made by WebBank, member FDIC.3.03 Prosper Personal Loans
Author: Christy Rakoczy
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