Prosper is a peer-to-peer lending platform based in San Francisco that has facilitated over $18 billion in loans since 2006. Prosper offers personal loans and home equity lines of credit (HELOC).
Borrowers can use Prosper personal loan proceeds for various purposes, such as debt consolidation, home improvement, auto loans, baby and adoption, or a special occasion. However, since Prosper is a marketplace platform, getting a personal loan isn’t as straightforward as working with a typical lender.
Once you apply, investors must make a financial commitment to reach your funding goal. As long as you reach 70% of your goal, your Prosper loan will be funded, but it can take a few days to hit that mark. However, if you’re able to wait for your loan funds instead of receiving them within a day or two, you may qualify for some attractive interest rates.
Prosper Personal Loans
A personal loan through Prosper comes with loan amounts that range from $2,000 to $40,000. Prosper offers fixed-rate APRs that vary from 7.95% to 35.99%.
Factors such as your credit score, income, and current debt load affect the exact rate you’ll receive. Prosper loans are relatively short-term, with a fixed loan term of either three or five years.
For example, a three-year $10,000 personal 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 personal loan with a 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. Borrowers must pay origination fees between 2.41%-5%.
APRs through Prosper range from 7.95% (AA) to 35.99% (HR) for first-time borrowers, with the lowest interest rates for the most creditworthy borrowers. Eligibility for Prosper 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 the Borrower Registration Agreement for details and all terms and conditions. All Prosper personal loans are made by WebBank, member FDIC.
All loan payments must be made monthly, and you can request a quote on your interest rate and other loan terms with no hard check on your credit report. All Prosper personal loans come with an origination fee, which ranges between 1% and 5%. The actual charge varies based on your rating. There are no prepayment penalties should you wish to pay off the loan early.
Borrower Profile
Most Prosper borrowers have good to excellent credit. The minimum credit score required is 640, but the average borrower has a 710. Prosper has no minimum income requirement. However, most Prosper borrowers have an income of just over $88,500, compared to the national real median personal income of $30,240.
To qualify for a Prosper loan, borrowers will need to have a debt to income ratio of under 50% and have fewer than five credit bureau inquiries during the previous six months. On top of that, you shouldn’t have any recent bankruptcies, and they do require a minimum credit history of two years. If you’re a brand new borrower, you likely won’t be approved.
Prosper Personal Loans Application Process
To start the application process, you’ll need to submit your social security number and financial information. You’ll likely also need to provide supporting documentation to confirm your income, such as recent pay stubs or a tax return.
Once you’ve been approved as a borrower, you’ll receive a Prosper rating, which lets investors know how risky your loan could be. But high risk doesn’t mean you won’t get funded — since investors can earn a higher rate of return, many prefer to fund these personal loans. After that, your loan is listed on the marketplace.
Investors can commit as little as $25 or as much as your entire loan amount. Most who choose to invest pick an amount somewhere between the two. Many investors have their portfolios built automatically based on their preference of risk ratings, so they might not even read your listing specifically.
You can check your application status through your online account, where you’ll see what percentage of funds has been committed to date.
You’ll also find a list of any missing documentation you need to submit. Then, once your loan hits 70% funding and your information has been verified, Prosper lets you move forward with receiving your funds.
Once You’re Approved
When your loan is approved and funded, you’ll receive funds in your bank account through direct deposit. The origination fee is deducted from this amount, so it’s important to make that calculation part of your financial planning process.
When it’s time to start making payments, you have several options available. Autopay is most recommended so that you can stay on track of your due date, but you can also pay by phone, online, or check.
There is a fee for making your monthly payment through check — either $5 or 5% of your payment, whichever costs less. For simple accounting, if your monthly payment is over $100, you’ll just owe the $5 in addition to your regular payment amount.
You can also incur a late fee for any payments made after the due date. If you reach 15 days past due, you’ll receive a fee of$15 or 5% of your unpaid bill, whichever one is greater. There’s also a $15 insufficient funds fee if your payment is returned.
Prosper Special Features
Prosper is partnering with Clarity Money to provide an app for users to manage their finances better. The app allows users to cancel unnecessary accounts and lower their bills.
And as long as you make your payments on time each month, you may be able to build your credit score with a Prosper loan because they report to all three credit bureaus. In addition, if you’re looking for a personal loan specifically to fund a medical procedure, Prosper has partnerships with providers to help their patients access credit.
Prosper Healthcare Lending helps providers offer their patients a financing option that could be an alternative to high-interest credit cards. You can get a loan approval decision in as little as two minutes.
Prosper’s History
Prosper began in 2005 and was the first peer-to-peer lending platform in the U.S. They’re dedicated to facilitating and servicing unsecured personal loans in a way that is beneficial to both borrowers and investors.
Currently, it’s a private company backed by prominent investors such as Sequoia Capital, Francisco Partners, Institutional Venture Partners, and the Credit Suisse NEXT Fund.
Prosper Reviews
One of the best ways to research online lenders is by reading third-party reviews. You can discover what actual customers are saying about them before you choose to do business with them.
Prosper currently has a Better Business Bureau (BBB) rating of A+ with only around 50 customer complaints to the Consumer Financial Protection Bureau.
Is a Prosper personal loan right for you?
Any financing decision is a personal one. So first, consider all your options concerning personal loans in general. Then, hone in on Prosper’s specific design to see if it’s a good fit for your needs. Here are a few factors to take into account before you make up your mind.
What are your financing options?
Depending on your funding needs, a personal loan may or may not be the best choice for you. In most cases, they’re best for people who need a large chunk of money and want a few years to pay it off. However, for short-term financial needs, you may find more flexibility with a credit card.
If you know you’ll be able to repay your debt in a short amount of time, look for a credit card with a low-interest introductory period. It may not be worth paying the personal loan origination fee, so do a side-by-side comparison of loan costs.
Your credit score, income, and current debt load also affect your best borrowing options. If your application is denied or your rate is exceptionally high, consider how time-sensitive your financial needs are.
Could you wait another six months to a year to use the funds? For something like a home remodeling or vacation, then the answer might be yes.
Take the time to actively repair your credit score or lower your credit card debt so that you can get better loan terms. Then, once you confirm that you’ve made some positive changes, redo the pre-approval process to check your new loan offer.
Is Prosper’s marketplace model right for you?
Peer-to-peer lending has opened up a lot of doors for borrowers and investors alike. But is it right for you? If you’re looking for fast funding, then probably not. Investors have up to 14 days to commit funds to your loan application, so it can take that long before you see any cash.
However, if you’re not in such a rush, a loan through Prosper could be a great option. It offers all the same perks as a traditional lender and could potentially even give you better personal loan rates than if you went to a regular bank.
Once your loan is listed on the Prosper marketplace, it’s essential to understand what investors see about you. While personally-identifying information like your name is withheld, they still see some basic information about your loan request.
On top of your Prosper rating, which indicates your creditworthiness, your listing also includes the intended purpose of the loan proceeds and your city and state.
While no one can figure out who you are, it’s something to be aware of to ensure it’s within your comfort zone. Investors can also see how much remaining funding is needed. This can help inform their own decision on how much to contribute.
Final Thoughts
Once you weigh the pros and cons, you can go online for a pre-approval. Then, you can check your rate with just a soft credit check so you don’t have to worry about any hard pulls affecting your credit report.
If you like what you can see, you can complete the application process and move into the funding portion. From start to finish, you’ll benefit from total transparency with Prosper.
Customer service can be reached via phone Monday through Saturday or via email at any time.
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