Prosper is an online loan company that specializes in peer-to-peer lending. The company connects borrowers to investors. One of the company’s main goals is to help people “invest in each other in a way that is both financially and socially rewarding.”
The company offers several different types of loans with fixed interest rates. Typically, Prosper funds borrowers with good to excellent credit ratings. Borrowers considered to be “high risk” can be approved, but their rates are much higher.
About the Company
Founded in 2005, Prosper was the first peer-to-peer lending platform.
Prosper connects you with multiple investors who can look over your information and decide whether or not they want to fund your loan. This process is also known as crowdfunding.
Since their inception, Prosper has facilitated over $15 billion dollars in loans and have helped over 940,000 borrowers. The company has been featured on sites such as Bloomberg Businessweek, NBC, NPR, and Reuters.
Once your loan is funded, your origination fee is subtracted, and the remainder is deposited in your bank account. Prosper’s loans originate from WebBank, which is not owned or operated by Prosper.
All loans are unsecured, meaning that your approval and interest rate are determined by your creditworthiness instead of collateral.
In this review, you’ll learn:
- The types of personal loans you can get through Prosper
- The amount you can borrow
- The rates, terms, and fees associated with Prosper
- What qualifications you need to meet in order to take out a Prosper personal loan
- Information about Prosper’s customer service
Personal Loans Offered by Prosper
Prosper offers several different types of personal loans.
1. Debt Consolidation
Debt consolidation loans are one of the most common types facilitated by Prosper. Debt consolidation loans allow you to pay off existing debts from different sources, such as credit cards, eliminating the need to make multiple payments each month.
2. Home Improvement
Prosper offers loans that enable you to make repairs on your home without having to tap into your home’s equity.
Home equity loans are secured and use your house as collateral. Prosper’s personal loans are unsecured and do not come with this requirement.
3. Auto Loans
While a bank can finance the purchase of a car, going this route entails using the car as collateral for the loan. Car loans from banks also typically require the car to have full insurance coverage until the loan is completely paid off.
Since Prosper loans don’t require you to use the car (or anything else) for collateral, you can choose the insurance coverage that best suits your needs.
4. Large Purchases
If you plan to make a large purchase, such as an engagement ring or a honeymoon trip, a Prosper personal loan can help you to secure the financing you need with more competitive rates than those on a credit card or traditional bank loan.
5. Other Personal Expenses
When applying for a loan through Prosper, you will be asked what the money will be used for. On their website, Prosper lists several miscellaneous reasons for requesting a loan. These include:
- Medical and dental expenses
- Special occasions
- Baby or adoption
Proper Personal Loans: Rates and Terms
The rates of Prosper’s personal loans range from 6.95% up to 35.99%. Prosper is able to offer lower interest rates because they conduct their screening process virtually.
There are also fewer underwriting costs associated with loans. The rates you are offered depend on a few different factors, including your credit score and your loan term. Generally, the better your credit score, the lower your interest rate will be.
All interest rates for Prosper loans are fixed. They will not change throughout the life of the loan. Your minimum monthly payment is the same until the loan is paid off.
There are only two-term options for Prosper loans:
- 3 years (36 months)
- 5 years (60 months)
While there are two options, you might not be eligible for both. The terms available to you are dependent upon your Prosper rating and the total amount that you are requesting.
Choosing a 3-year term might mean paying more every month, but your interest rate will typically be lower and you’ll pay less in interest overall. No matter which term option you select, you can always make larger payments than the minimum. There are no penalties for paying off your loan before the term is over.
Once you accept your loan terms, they cannot be changed. In order to have the terms changed you will need to first cancel the original loan. You must do so before origination. After canceling the loan, you will then have to submit a new request.
Prosper charges an origination fee for your loan. Fees range from 2% to 5% and are based on the rating that Prosper assigns you when you apply. Your rating is based on factors such as your credit score, your income, and your debt-to-credit ratio.
Fees are charged for late payments. You are charged 5% of the payment past due or $15, whichever amount is greater.
You will also be charged a fee of $15 if you do not have enough money in your connected bank account to cover the cost of your payment.
Prosper does not charge any fees for paying your loan off early. You can make payments larger than the minimum amount if you want to pay off the loan sooner. All loans are fully amortized. Once the last payment is made, you will have a balance due of zero.
Prosper will fund loans between $2,000 and $40,000. The maximum amount that you can borrow is based on your Prosper rating.
How Long Does It Take to Get Funding?
Once your loan is listed, potential investors are able to view it and determine whether or not they want to fund it. After the loan is fully funded, it goes into the verification process.
Once verified, the loan is closed and the funds are dispersed. The amount of time it takes for you to receive your funding varies between 1 to 3 days depending upon your bank. It can take up to 3 days for you to receive your money.
Personal Loan Requirements
In order to receive funding through Prosper, you will need to meet certain personal loan requirements. Based on the information you provide, Prosper will determine if you are eligible for a loan, what you’re eligible for, and what your rates will be.
Qualifying for a Prosper Loan
Individuals who can qualify for a Prosper personal loan typically have good to excellent credit. The minimum FICO credit score required is 640 but the average borrower has a score of 717.
While Prosper will grant loans to those with less than good credit, borrowers will typically have higher interest rates.
Check Your Rate
The first step in qualifying for a Prosper personal loan is to check your rates. You will need to provide basic information, including:
- Your name, birthdate, and address
- The amount you need
- What the money will be used for
- Employment status
- Your annual income
- Monthly housing payment
Prosper will perform a soft credit check, which enables them to view a portion of your credit history. A soft pull does not affect your credit score but is important for determining whether or not you will qualify.
Completing Your Loan Application
If you qualify, Prosper will show you what your options are. You will be presented with the amount you qualify for, your term options, and what your rates are. Prosper shows the interest rate as well as the APR, which is the interest rate plus the origination fee you will be charged.
After selecting your term, you will be prompted to provide additional information:
- The name of your employer
- Your contact information
- Your social security number
Prosper will perform a hard credit check, which appears on your credit history, and assigns you a letter grade. Grades are attached to your loan and let potential investors know what your risk level is. Finally, you will be presented with a page that outlines your loan. After accepting the terms, Prosper will let you know if your loan application is approved.
Funding Your Loan
Once you apply for your loan, Prosper lists it for investors to view. At this time, you may also be requested to upload additional documentation.
Potential investors are able to view your application and decide if, and how much, they want to fund. Listings are active for 14 days, or until the loan is fully funded.
Paying Back Your Loan
After filling out the application for your loan, Prosper will ask you to connect your bank account. Your account information is used to deposit your funds as well as to make your monthly payments.
Your first payment is due one month after your loan is disbursed. Monthly payments will continue to be deducted on the same day each month for the life of the loan. If you need to, you can contact Prosper to change your due date. It is also possible to turn off the AutoPay feature.
Paying Your Loans Back Early
Prosper makes certain that borrowers know that it is acceptable to pay the loan back early. There are no penalties for doing so. You can also choose to make additional payments without fees or penalties.
Prosper Customer Service
Prosper’s customer service for borrowers is available Monday through Saturday for borrowers and Monday through Friday for investors.
- Monday through Friday, 5 am to 6 pm PST
- Saturday, 6 am to 2:30 pm PST
- Monday through Friday, 8 am to 5 pm PST
Prosper has been accredited with the Better Business Bureau since 2012 and currently has an A+ rating.
On Trustpilot, Prosper has a rating of 1 out of 5 stars out of 55 reviews. 58% of the reviews on Trustpilot are excellent, with 16% being great. 16% of the reviews are poor.
- Interest rates are reasonable.
- Your rates will never increase.
- No penalties for paying your loan off early or making additional payments.
- Limited options for payback terms.
- Origination fees are based on your Prosper rating.
- Those with less than stellar credit scores may not qualify. If you do, your interest rate will be higher than someone with good or excellent credit.
- You cannot change the terms of your loan.
- It may take a few days to get your money.
If you have good credit, Prosper can be a good alternative to traditional financing. Prosper’s rates are reasonable and you don’t have to worry about them changing during the term of your loan.