Business

Prosper Personal Loan Review

Posted May 21, 2018 2:47 p.m. EDT
Updated May 22, 2018 6:00 p.m. EDT

What is Prosper?

[ProsperPL]Prosper[/ProsperPL] is a peer-to-peer lender based in San Francisco. The company matches borrowers of fixed-rate, fixed-term loans to investors willing to fund them. Prosper.com is more like a marketplace than a traditional financial institution — the company services lending between investors and borrowers but the funds themselves originate through Utah-based WebBank.

Since 2005, Prosper has facilitated more than $12 billion in loans to more than 770,000 people. This review covers how Prosper compares with other lenders.

Prosper Personal Loan Highlights

  • Peer-to-peer lending: If you want to work outside of a conventional bank, Prosper’s online marketplace is a good alternative.
  • Average credit requirement: [ProsperCreditScore]Prosper considers borrowers with scores as low as 640.[/ProsperCreditScore]
  • [ProsperPrepayFee]No prepayment penalties: There is no penalty for paying your Prosper loan off before the end of your term.[/ProsperPrepayFee]
  • Funding is slower: Because you have to wait on investors to commit funds, it may take up to 14 days before your loan is originated.
APR5.99%To35.99%Credit Req.640

Minimum Credit Score

Terms36 or 60

months

Fees 1.00% - 5.00%

APPLY NOW Secured

on Prosper’s secure website

Prosper is a peer-to-peer lending platform that offers a quick and convenient way to get personal loans with fixed and low interest rates. The interest rate you receive is determined by their own proprietary “Prosper Rating”. You can qualify for a loan with average credit and there are no prepayment fees, but your origination fee can be expensive, depending on your Prosper Rating.Prosper is not available in Vermont, Connecticut, Iowa, North Dakota, Maine, New York and Pennsylvania.

Prosper personal loan details

[Chart-ProsperPersonalLoanDetails]

Fees and penalties

  • Terms: Loan terms are set at 36 or 60 months.
  • APR range: Rates range from 5.99% to 35.99%.
  • Loan amounts:Prosper will loan a minimum of $2,000 and a maximum of $35,000.
  • Time to funding: On average, borrowers will see funds deposited in their bank accounts within five days. However, investors have up to 14 days to fund loans.
  • Hard pull/soft pull: Prosper does a soft pull on your credit when you check your rates.
  • Origination fee: Origination fees range from 1% to 5% and will be deducted from the final loan amount.
  • Prepayment fee: Prosper has no prepayment penalties for paying your loan off early.
  • Late payment fee:You will be assessed a late fee of $15 or 5% of your unpaid monthly amount — whichever is greater — if you have not paid in full within 15 days of your due date.
  • Other fees:Prosper charges a check processing fee — the lesser of $5 or 5% of your monthly payment — as well as an insufficient funds fee of $15 for each returned or failed payment.
[/Chart-ProsperPersonalLoanDetails]

Eligibility requirements

  • [ProsperCreditScore]Minimum credit score: To qualify, borrowers must have a score of 640 or above.[/ProsperCreditScore]
  • Minimum credit history: Borrowers must have at least three open trades on their credit reports.
  • Maximum debt-to-income ratio: A borrower’s DTI must be below 50%.

In addition, borrowers must:

  • Be 18 years of age
  • Have a bank account and a Social Security number
  • Have fewer than seven inquiries on their credit reports in the previous six months
  • Report an income greater than $0
  • Have not filed for bankruptcy in the last 12 months

Prosper is not available to borrowers in Iowa or West Virginia.

Applying for a personal loan from Prosper

[ProsperInq]To apply for a Prosper loan, start by filling out their online form to check your rates, which will trigger a soft pull on your credit — this does not impact your score.[/ProsperInq]You’ll have to provide some personal information, including your physical address, birthdate, email, annual income, monthly housing cost and employment status.

You can also apply via phone.

Your loan offer is based on your Prosper Rating, a proprietary score assigned to you when you apply. This score indicates the level of risk you pose to lenders and is intended to create consistency in the evaluation and approval process. An AA rating indicates the lowest estimated annual loss (up to 1.99%), while an HR rating represents the highest (15% or more).

If you choose to accept the offer you receive, you can submit documents for verification via email to approval@prosper.com, or upload them within your Prosper account. The latter is recommended. Log in to check the status of your documents, application and the percentage of funding you’ve received. Once you accept an offer and request funding, [ProsperInq]Prosper will perform a hard inquiry on your credit.[/ProsperInq]

Your loan will be listed for up to 14 days, during which investors commit funds, and Prosper completes the underwriting and verification process. The latter usually takes seven business days or less. If your loan is not funded after 14 days, your listing will be canceled and you’ll need to create a new one.

Once your loan application has been approved and your listing is funded, you can expect to see your money deposited in your bank account within 1-3 business days.

Pros and cons of a Prosper personal loan

Pros:

Cons:

  • Qualify with lower credit. Prosper will consider applicants with scores as low as 640, though the best rates are offered to those with excellent credit. Borrowers can receive funds in as little as one business day after loan approval
  • Check rates with a soft credit pull. Your credit won’t be affected when you check your interest rates with Prosper.
  • No prepayment penalties. Prosper offers longer terms of three and five years, but you won’t be penalized if you are able to pay your loan down early.
  • The origination fee. Prosper charges 1%-5% to originate your loan, so consider whether this added cost makes sense for you.
  • Potential to go unfunded.Investors have to commit to your loan within 14 days of listing. If this doesn’t happen, you will have to create a new listing, which means more time before you receive your funds.

Who’s the best fit for a Prosper personal loan

If you have average credit, Prosper may be a good fit for you. [ProsperCreditScore]With a minimum score requirement of 640,[/ProsperCreditScore] you’ll have slightly more leeway than you would with lenders who have stricter standards. However, you’re more likely to qualify for a better rate with a higher score — [ProsperAPR]Prosper’s APRs go up to 35.99%,[/ProsperAPR] which is higher than other lenders with similar credit requirements.

Prosper is also a good option for those who want to reduce their monthly payments and pay down their loans over a longer period of time. [ProsperTerm]Terms are set at three or five years[/ProsperTerm] — and if your financial situation improves and you are able to pay more quickly, there are no penalties to do so.

Checking rates at Prosper doesn’t impact your credit, so there’s no harm in gathering this information and comparing it with other lenders.

Alternative personal loan options

Here are several alternatives to Prosper:

Lending Club

APR5.98%To35.89%Credit Req.600

Minimum Credit Score

Terms36 or 60

months

Fees 1.00% - 6.00%

APPLY NOW Secured

on Lending Club’s secure website

LendingClub is a great tool for borrowers that can offer competitive interest rates and approvals for people with credit scores in the mid-600s. The loan application process is online and only takes a few minutes to complete and you can check your interest rate without hurting your credit. The loan processing time can take a while and you might not get approved if you have missed payments in the past.LendingClub is not available in Iowa and West Virginia

Like Prosper, [LendingClubPL]LendingClub[/LendingClubPL] is a peer-to-peer lending platform funded by investors. The rates and terms are similar, and [LendingClubInq]they won’t do a hard pull on your credit until after you’ve checked your rates and completed your application.[/LendingClubInq] LendingClub is a good alternative if you don’t meet Prosper’s minimum credit score requirement — [LendingClubCreditScore]they will consider borrowers with scores as low as 600.[/LendingClubCreditScore] [LendingClubPrepayFee]You will pay an origination fee, but there are no prepayment penalties.[/LendingClubPrepayFee] Expect to wait up to seven days to see your funds deposited.

Upgrade

APR5.96%To35.97%Credit Req.620

Minimum Credit Score

Terms36 or 60

months

Fees 1.00% - 6.00%

APPLY NOW Secured

on Upgrade’s secure website

Loans made through Upgrade feature APRs of 5.96%-35.97%. All loans have a 1% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay. For example, a $10,000 loan with a 36 month term and a 17.97% APR (which includes a 5% origination fee) has a required monthly payment of $343.28. Upgrade is available in all states except: Connecticut, Colorado, Iowa, Massachusetts, Vermont, West Virginia.

[UpgradePL]Upgrade[/UpgradePL] is an online lender that offers similar personal loan rates and terms to both Prosper and LendingClub. You can check your rates without impacting your credit — sign up for autopay and get a better rate. Upgrade is a good alternative if you need to borrow more or less than what [ProsperLoanAmt]Prosper offers, as loans are a minimum of $1,000 and a maximum of $50,000,[/ProsperLoanAmt] or if you need your money more quickly. Upgrade claims most borrowers can expect to see their funds within four business days of approval.

Marcus by Goldman Sachs®

APR6.99%To24.99%Credit Req.Varies

Minimum Credit Score

Terms36 to 72

months

Fees No origination fee

APPLY NOW Secured

on Marcus By Goldman Sachs®’s secure website

Your loan terms are not guaranteed and are subject to our verification of your identity and credit information.... Read More To obtain a loan, you must submit additional documentation including an application that may affect your credit score. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans).Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your verifiable income must support your ability to repay your loan. Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA and all loans are issued by Goldman Sachs Bank USA, Salt Lake City Branch. Applications are subject to additional terms and conditions. Read Less

Consider [MarcusGoldmanSachsPL]Marcus by Goldman Sachs[/MarcusGoldmanSachsPL] if you want a no-fee personal loan. [MarcusGoldmanSachsOrgFee]This means no origination fee,[/MarcusGoldmanSachsOrgFee] [MarcusGoldmanSachsPrepayFee]no prepayment penalties,[/MarcusGoldmanSachsPrepayFee] and [MarcusGoldmanSachsLateFee]no late fees — even if you miss a payment.[/MarcusGoldmanSachsLateFee] Rates are slightly more favorable than those offered at Prosper and [MarcusGoldmanSachsTerm]terms go up to 72 months,[/MarcusGoldmanSachsTerm] which gives you more flexibility to pay over time. However, [MarcusGoldmanSachsCreditScore]you are more likely to be approved for a Marcus by Goldman Sachs loan and get the best rates with a credit score of 660 or above,[/MarcusGoldmanSachsCreditScore] so this alternative is best for those with higher credit.

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