In this Review..
Known as the first peer-to-peer lending marketplace in the United States, Prosper was founded in 2005. Peer-to-peer lending works in a way that’s unique to other corporate institutions. The way it works is that borrowers apply online for a fixed-term loan for anywhere between $2,000-$40,000. Once two peers are matched, Prosper takes care of all loan services for both parties.
If your credit score is at least 640 and you like the idea of individuals coming together, this lender may be the best option for you. Prosper accepts a wide range of borrowers and members are allowed to take out more than one loan at a time. They offer competitive rates and, use soft pull inquiries, and they offer a business loan too.
While this option may seem utopic, there’s a downside to a peer-to-peer system. Relying on someone to back your loan could mean potentially waiting a long time for your loan to get serviced. You may get to a point where nobody funds it at all, which is inconvenient no matter what reason you need the money.
Along with this, Prosper isn’t available in every state and they do charge an origination fee for their services.
Prosper is the first peer-to-peer lending marketplace, offers personal loans for a wide variety of purposes and to a large market of borrowers.
7.95% - 35.99%
2,000 - $40,000
Propser Loan Pros & Cons
As we know, each lender has its own pros & cons – here are the relevant things we found for potential borrowers:
Here are the basic specifications & requirements of Prosper Personal Loan :
What Can a Prosper Personal Loan Be Used For?
Prosper loans can be used for debt consolidation, home improvement, short-term and bridge loans, car purchases, baby expenses and adoption costs, engagement rings, small business costs, military loans, green loans, and special occasions
A Prosper home improvement loan is for home repairs or projects.
The advantage of using a Prosper home improvement loan is the promptness of receiving the funds.
Typically, it takes a month or more to get an equity line of credit on your home.
Prosper loans do not have any prepayment penalty and have short terms.
Borrowers can use Prosper for short-term financing or as a bridge for any gaps in long-term financing.
Or if borrowers find a better rate they can pay off the loan early without penalty.
Prosper allows personal loans to be used for business use. Many other lenders only allow this type of loan for personal use.
The loan can be used to purchase inventory, fund payroll, or pay for any other general business needs.
It can help pay for your startup or fill gaps in financing when otherwise it can be difficult for a small business to get financing.
The advantage of a debt consolidation loan with Prosper is that the payment and term are fixed so you know exactly when you’ll be out of debt.
The idea is that you can take a high revolving interest credit card and save money by replacing it with a low rate fixed installment
Prosper allows their personal loans to be used for car purchases without using the car as collateral.
Many times car loans are cheaper but if you are unable to get credit, Prosper may be a good option. Because many lenders require that the car be used as collateral, they will limit the type of car you can get.
For example, with Prosper, you could use the loan to pay for a salvage title or classic car when with other lenders you wouldn’t be able to.
A Prosper loan for baby and adoption can be used to help manage medical bills for a new baby or legal bills for adoption.
The cost of living increases when you have an addition to your family and a Prosper loan can help cover those costs
Prosper green loans are home improvement products that help your home become more energy efficient and environmentally friendly.
Many green projects can cost a lot upfront but will help you save money, in the long run, every month on your energy costs.
Prosper can help with the upfront cost through a green personal loan.
The application process is a little different with Prosper because you not only apply but also create a profile for potential investors to evaluate you as a risk and accordingly lend you money for a portion of the loan. You being the process by checking your rate through a soft pull.
This is where they will get the information they need to give you your rate. You will create a quick profile explaining why you need the loan.
Your listing will then be posted on Prosper’s marketplace for up to 14 days where investors will look at your profile and decide whether to invest in your loan. Many listings do not stay up for the entire 14 days.
After your loan is funded, Prosper may ask you for some verification information, such as state ID, social security card, and income. You will sign documents electronically for the loan and then the funds will be sent to your bank. It could take a few days after funding for Prosper to deposit the money in your account.
Prosper is a peer to peer lender offering personal loans to those with good or fair credit. However, the company uses more than your credit score to determine if you qualify. The criteria includes your credit history and debt to income ratio.
Prosper is also a good option if you are interested in using a co borrower on your application, which some lenders don’t allow.
Prosper does require applicant income verification, so you will need to provide documents such as bank statements, recent pay stubs or tax returns. Additionally, in some cases, Prosper may contact your employer or use other databases to confirm your employment status.
Rocket Loans offers loans with a fast turnaround. If approved, you can expect to receive the funding the same business day. The starting APR is similar to Prosper and the maximum loan amount is also similar. However, you can expect to pay an origination fee of as much as 6%.
So, if you have a fair or good credit score and are looking for quick cash, Rocket Loans could be a better option
In the past, Citibank actually purchased Prosper loans, which may leave you thinking that the two entities are one in the same. However, this is not the case. Citibank has a higher maximum loan amount, yet its rates are lower and Citibank has no established minimum credit score.
To qualify for a Citibank personal loan, you do need to be an existing customer. So, if you already have a Citibank account, it is likely to offer a better deal than Prosper.
Is Lending Club better than Prosper?
Prosper is very similar to Lending Club in that you need a credit score of 630+ to qualify and it takes approximately one week to process your application. However, Prosper does require an additional one to three business days to issue the funds. So, if you’re looking for quicker access to the money, Lending Club is a better option.
Like Lending Club, Prosper does not charge anything if you want to pay off your loan early and the late fees are the same.
One area where Prosper stands apart from Lending Club is that it is open to borrowers with a high debt to income ratio of up to 50%, whereas Lending Club’s maximum is 40%.
Alternatives Lenders For Consideration
Here are our 3 choices of lenders which can use as a great alternative to Prosper personal loan:
SoFi has moved away from that business model and moved to a “non-traditional underwriting approach focused on lending to financially responsible individuals. SoFi uses an underwriting model that examines free cash flow, professional history and education in addition to a history of responsible bill payment to evaluate its borrowers.”
SoFi personal loans have no origination or late fees. They also do not have a prepayment penalty so the loan can be paid off early without additional costs. SoFi gives borrowers flexibility in payments and allow you to change payment due dates and do not charge late fees.
Best Egg is an online lender that was founded in 2014. Best Egg specializes in personal loans and has funded over 600,000 loans.
Like Marcus personal loans, Best Egg also offers prequalification. This allows you to check your initial rate without affecting your credit score. A hard inquiry will only be conducted if you decide that you want to move on with your application.
If you have good credit, you can expect a very low-interest rate, and loan processing is fast, taking just a few minutes to complete.
This company is an online lender that offers very high loan amounts yet at low interest rates. LightStream is part of the Trust Bank group, formerly the SunTrust Bank. You can use the loan for any purpose, including home improvements, debt consolidation, etc.
LightStream does not charge fees. So, there are no late payment fees, processing fees, or pre payment fees. They even offer $100 to customers if they are unsatisfied with their loan processing experience and are willing to beat competitor’s rates by 0.1%.
If you find a lender offering a better rate than LightStream, the company will offer you a 0.1% decrease to highlight that they are a better option.
Most of the loans have a term of two to seven years, but this may be extended to 12 years for solar financing, home improvement loans, or swimming pool loans.
Prosper Loan is Best for..
Prosper marketplace is a great place to start in your personal loan search.
They offer personal loans for a wide variety of purposes and to a large market of borrowers.
They do have a high origination fee while other providers do not have one. The process will take longer than with other platforms, so if you need funds quickly Prosper may not be the right place to start your search.
- A+ on BBB: BBB assigns ratings from A+ (highest) to F (lowest). BB ratings are based on information in BBB files with respect to factors such as the business's complaint history with BBB, type of business, time in business, transparent business practices, and more.
- 4.5/5 on Trustpilot ( +4800 reviews): TrustScore is also an overall measurement of reviewer satisfaction, represented numerically from 1 to 5.
- 840/1000 points on J.D Power: Prosper got 840 out of 1000 possible points in the 2020 research, lower than industry average. .J.D Power offers the most comprehensive and independent study of personal loans consumer satisfaction . The study aims to help consumers and issuers to understand user opinions and ratings of top lenders. It covers terms, benefits, services, communication, transparency and more.