Prosper Personal Loans Pros and Cons
- Can borrow small or large amounts of money
- Flexible payment dates
- Pre-approval only requires a soft credit check
- The entire loan process takes place online
- Unique, peer-to-peer funding system
- Good customer service
- Charges an origination fee for all loans
- Does not accept co-signers
- $15 minimum late payment fee
What Is Prosper?
Prosper is a peer-to-peer platform that connects individual borrowers with individual lenders. They offer service to individuals with fair to good credit. However, like most personal loan services, they provide better rates to people with better credit
When qualifying applicants, Prosper takes into account a large number of factors. These include not just your credit rating but also your debt-to-income ratio.
At that point, they assign you a score that’s only visible to their investors, and the investors decide whether or not they want to fund your particular loan.
From the time your score is listed, you’ll have 14 days to get at least 70% of your loan funded. Otherwise, it will be canceled. In most cases, loans are fully funded within the first 72 hours.
How Do Prosper Personal Loans Work?
When you apply for a Prosper loan, you choose how much money you want to ask for.
Borrowers can choose to take as little as $2,000 or as much as $40,000. You also have your choice of borrowing for a three- or five-year term.
Your monthly payments will be lower on a five-year term, but the total cost will be higher. You’ll have higher monthly payments on a three-year term, but the total cost will be less.
The APR for a Prosper loan is between 7.95% and 35.99%. Exactly what rate you pay will depend on your individual circumstances.
In general, rates are lower for individuals with better credit, but other factors may come into play.
What Loans Does Prosper Offer Consumers?
Prosper offers personal loans to individuals. This means you’re borrowing money for yourself, and you can use it for just about anything.
Unless you’re paying for college or business expenses, you’re free to use the money for whatever you like.
You can also apply for a joint loan with a spouse, partner, or another individual. There’s no need to put up any collateral.
The one thing you can’t do with Prosper is ask for a co-signer on your loan. This can make it more difficult to get approved if you have bad credit.
The best option, in that case, is to take out a joint loan with someone you trust.
Prosper Personal Loans Features and Benefits
All of Prosper’s services are 100% online. You apply, get approval, and make your payments through their website. There’s no need to send paper checks or go into a brick-and-mortar office.
Joint Applications Accepted
In addition to applying as an individual, you can apply jointly with a spouse, partner, or friend. The advantage of a joint application is that you can get approved with lower credit.
While Prosper normally requires a credit score of 640, secondary borrowers on a joint application can qualify with a score as low as 600.
They’ll still need to meet other requirements, though; for example, they can’t have filed for bankruptcy within the last year.
Checking Rate Doesn’t Hurt Credit
When you pre-apply for a Prosper loan, they’ll run a soft credit check instead of a hard one. This means you can see your rates without taking a hit on your credit score.
Keep in mind that they will run a hard check when you actually submit your application, which may impact your credit.
No Pre-Payment Penalties
Some lenders charge an extra penalty fee for borrowers who pay off their loans early. Prosper allows you to pay as much as you want.
If you decide to pay a bit extra each month or pay off the entire loan in advance, you won’t get punished for it.
Fast Loan Funding Time
Prosper personal loans are normally funded within 72 hours of your final application. That said, some can take as much as two weeks to get funded.
Home Equity Line of Credit
In addition to their unsecured loans, Prosper also offers home equity lines of credit in some states. With this kind of loan, you use your home as collateral to secure the loan. This can help you get a lower rate.
Prosper Personal Loan Fees Explained
When you take out a personal loan from Prosper, you have to pay an upfront fee. This origination fee can be between 2.41% and 5.99% of your total loan amount.
The good news is that you don’t have to pay this fee out of pocket. The bad news is that it gets taken right out of the loan.
For example, if you take a $10,000 loan with a fee of 4%, you’ll actually receive $9,600. This is something you’ll have to remember when determining how much you want to borrow.
The other fee you’ll need to keep in mind is Prosper’s late payment fee. If you’re more than 15 days past your due date, you’ll be charged $15. Fortunately, you can avoid this fee entirely just by paying your bills on time.
How to Qualify for a Prosper Personal Loan
To qualify for a Prosper personal loan, you need:
- A credit score of 640 or higher
- Two years’ minimum credit history
- A debt-to-income ratio of less than 50%
- A regular source of income
- No bankruptcies within the last 12 months
- A minimum of three open credit lines
- Fewer than five hard credit checks within the prior six months
As long as you pre-qualify, you’ll be assigned with an internal letter rating from Prosper. These range from AA to A, B, C, D, E, and HR, which is short for “high risk.”
Investors will then review your application and offer you a loan based on your financial history.
If you fall into one of the higher categories, you may even receive more than one offer. In that case, you’re free to choose the best one.
How Does Prosper Compare to Other Lenders?
#1. Prosper vs. Upstart
While Prosper is ideal for people with fair-or-better credit, it’s not suitable for people with no credit at all. Upstart is designed for people with only a very short credit history or even with none whatsoever.
They do this with manual underwriting, where a human being personally reviews each application.
That said, Upstart’s interest rates tend to be fairly high. This is fine if you don’t have any other choice. But if you’ve got a better credit score, you’re liable to get a better rate with Prosper.
>> More: Upstart Personal Loans Review
#2. Upgrade vs. Prosper
Upgrade is a service for individuals with poor credit. If you’ve had some trouble in the past and your credit is shaky, this is a way to get a personal loan and start setting things right.
On the downside, you have to pay a higher APR than you will for most other loans. If you’ve got good credit, Prosper is a better choice.
>> More: Upgrade Personal Loans Review
#3. LendingClub vs. Prosper
LendingClub is one of the few services out there that’s similar to Prosper. It’s a peer-to-peer platform that pairs borrowers with investors instead of with a specific institution.
It’s a good choice for smaller loans since they offer amounts as low as $1,000. You can also get approved with only moderate credit, as low as 600.
#4. Payoff vs. Prosper
Payoff is another lending service with its own unique niche. It’s made for people who have existing, high-interest debt that they want to pay down.
With Payoff, you can take a single, lower-interest loan that covers the expense and gets you lower monthly payments.
>> More: Payoff Personal Loans Review
Frequently Asked Questions
Is It Hard to Get a Loan through Prosper?
It depends on your financial situation. If you have steady employment and a credit score in the high-600s or more, it’s very easy. If your credit score is closer to the minimum, you’ll have a harder time getting the terms you want.
What Credit Score Is Needed for a Prosper Personal Loan?
Prosper requires a minimum credit score of 640 or higher to obtain a loan through their platform. That said, your APR and the maximum loan amount will depend in part on your score. To access the lowest rates, you’ll need a score of 790 or higher. This makes it possible for you to get Prosper’s coveted AA rating – the best they have.
How Long Does It Take to Get a Loan from Prosper?
It depends on how long it takes for investors to fully fund your loan. In most cases, you’ll get approved within two to three days. However, it can take up to two weeks, depending on your personal situation.
Is Prosper Legit?
Yes. Prosper is a legitimate company. They’ve been in operation since 2005 and have processed more than $18 billion in loans during that time.
Is It Safe to Use Prosper?
Prosper is perfectly safe to use. They have an A+ rating with the Better Business Bureau. In 2020, the CFPB received 30 customer complaints about Prosper. The most common complaints were people who had been denied loans and people who had issues making payments. Prosper responded to all complaints in a “timely” manner, according to the CFPB.
Of course, you still run into the same risks you take with any loan. If you’re somehow unable to repay, it will severely impact your credit. But that’s the case no matter which personal loan provider you choose.
Bottom Line: Prosper Personal Loans Review
Prosper personal loans provide a unique way to get the money you need. Instead of applying to a faceless institution, you’re putting your profile in front of real investors.
In addition to that, it provides a good value for individuals with good credit. The minimum APR is competitive with many of the most popular programs on the market.
On the other hand, the maximum APR is sky-high. If you’re saddled with a mediocre credit score, you might not be able to qualify at the rate you want.
Then again, it never hurts to pre-apply and find out. Worst case scenario, you don’t like what you’re being offered. Best case scenario, you get a great rate on the loan you want.