If you’re having trouble finding an affordable loan with a traditional bank or credit union, a peer-to-peer (P2P) lending company, or a similar lending platform, is worth a closer look. Unlike traditional lenders, peer-to-peer loan companies work with individual or corporate investors who supply money to fund business and consumer loans. Similarly, online lending platforms fund borrowers through their institutional lending partners.
Since investors are often allowed to pick the loans they want to fund, the approval process with a P2P loan company may be more flexible than it is with a traditional lender. Some P2P companies and lending platforms even use less conventional data to determine creditworthiness, relying on artificial intelligence software and other tools in addition to credit scores.
We scoured the personal loan market and identified the six best loan companies in the peer-to-peer and lending platform arena. Here’s what you need to know.
Best Peer-to-Peer and Platform Loans of January 2021
| Lender | Why We Picked It | APR | Minimum Loan Amount | Maximum Loan Amount | Terms | Recommended Credit Score |
|---|---|---|---|---|---|---|
| Peerform | Best Overall, Best for Low Rates and Fees, Best for Borrowers With Lower Credit Scores | 5.99%-29.99% | $4,000 | $25,000 | 3 years | 600+ |
| Upstart | Second Best Overall, Best for Recent Grads | 8.27%-35.99% | $1,000 | $50,000 | 3 and 5 years | 600+ |
| Payoff | Best for Paying Off Credit Card Debt | 5.99%-24.99% | $5,000 | $40,000 | 2-5 years | 640+ |
| Prosper | Best for Large Loans, Best for Joint Applications | 7.95%-35.99% | $2,000 | $40,000 | 3 and 5 years | 640+ |
| Upgrade | Best for Small Loans | 7.99%-35.97% | $1,000 | $35,000 | 3 and 5 years | 620+ |
| LendingClub | Second Best for Small Loans | 10.68%-35.89% | $1,000 | $40,000 | 3 and 5 years | 580+ |
Peerform: Best Overall, Best for Low Rates and Fees, Best for Lower Credit Scores
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Peerform uses its proprietary algorithm to grade applicants who may be more creditworthy than traditional credit scores suggest.
Unlike many competitors, Peerform gives borrowers with thin or damaged credit an alternative to high-interest payday loans and other predatory financial products, such as fee-laden credit cards.
And just as it stands out for being willing to lend to borrowers with relatively low credit scores, it’s a strong choice even for borrowers with strong credit. Peerform’s best rate of 5.99% is as low as we could find for a peer-to-peer or platform lending company (and pretty good for any personal loan), and even its maximum APR offer is comparatively low at 29.99%.
On the downside, Peerform does charge a number of fees, including a 1% to 5% origination fee and a 5% late fee. While these fees are within the normal range among lenders who charge them, not all competitors do. Plus, Peerform’s personal loans are only available in three-year terms. While there aren’t any penalties for paying your loan off early, if you need to stretch your payments for longer, you’re out of luck.
Borrowers with lower credit scores may qualify
No outrageous rates above 30%
Extra-low APR for borrowers with great credit
Can’t borrow for longer than three years
No co-signers or joint applications allowed
Fees, including an origination fee for all borrowers
Not available to borrowers in Connecticut, North Dakota, Vermont, West Virginia, or Wyoming
Peerform Personal Loan Details
| Loan amounts | $4,000-$25,000 |
| Fixed APR Range | 5.99%-29.99% |
| Loan Terms | 3 years |
| Origination Fee | 1%-5% |
| Late Fee | 5% ($15 minimum) |
| Time to Receive Funds | It varies, according to a Peerform customer service representative |
| Recommended Score | Minimum FICO score of 600, according to Peerform |
| Funding Source | May only be open to institutional investors currently |
Read the full review: Peerform Personal Loans
Upstart: Second Best Overall, Best for Recent Grads
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This unusual lending platform uses academic and employment credentials to look for borrowers with potential, even if they have thin or imperfect credit histories.
Upstart’s motto is “You are more than your credit score,” and indeed, you don’t even need to have a credit score to get funding. (If you do have credit experience, though, you’ll need at least a 600 credit score.) In exchange for sharing unconventional information—things like the university you attended, your area of study, or who you’ve worked for—you may be able to secure a lower rate than you’d get from a traditional lender.
Upstart may be particularly good for young, first-time borrowers like recent college graduates. It’s one of the few lenders with competitive terms that explicitly advertises a willingness to consider applicants without any credit history at all. Plus, Upstart’s lowest APR is pretty low, and there are no origination fees to borrowers with the strongest applications.
Not everyone will get approved for such competitive terms, though. And Upstart has a very high maximum APR and charges some borrowers origination fees as high as 8%. That’s a good 2-3 percentage points higher than the maximum assessed by competitors on this list. The lending platform also won’t accept any co-signers, which could mean you’re more likely to get stuck with a high rate, depending on your creditworthiness.
Accessible if you have a fair or thin credit history (even first-time borrowers are eligible)
Potentially better APRs for those with lower credit scores, thanks to alternative credentials
No origination fee for select borrowers
Very high maximum APR
High origination fees for some borrowers
No co-signers allowed
Not available to borrowers in Iowa or West Virginia
Upstart Details
| Loan amounts | $1,000-$50,000, based on credit, income, and other information considered in your loan application |
| Typical APR Range | 8.27%-35.99% |
| Loan Terms | 3 and 5 years |
| Origination Fee | 0%-8% |
| Late Fee | 5% ($15 minimum) |
| Time to Receive Funds | 1 business day after acceptance for most loans, 2 if you accept the loan offer past 5 p.m. EST |
| Recommended Score | If you have credit history, you’ll need a minimum score of 600, according to Upstart. However, Upstart will consider your application if you don’t have any credit history |
| Funding Source | Individual and institutional investors |
Read the full review: Upstart Personal Loans
Notes: Your loan amount will be determined based on your credit, income, and certain other information provided in your application. Not all applicants will qualify for the full amount. Loans are not available in West Virginia or Iowa. The minimum loan amount in MA is $7,000. The minimum loan amount in Ohio is $6,000. The minimum loan amount in NM is $5100. The minimum loan amount in GA is $3,100.
If you accept your offer by 5 p.m. EST (not including weekends or holidays), you will receive your funds the next business day. Proceeds used to fund education-related expenses are subject to a 3-business-day wait period between acceptance and funding in accordance with federal law.
The full range of available rates varies by state. The average three-year loan offered across all lenders using the Upstart platform will have an APR of 25.16% and 36 monthly payments of $37 per $1,000 borrowed. There is no down payment and no prepayment penalty. Average APR is calculated based on 3-year rates offered in the last 1 month. Your APR will be determined based on your credit, income, and certain other information provided in your application. Not all applicants will be approved.
When you check your rate, we check your credit report. This initial (soft) inquiry will not affect your credit score. If you accept your rate and proceed with your application, we do another (hard) credit inquiry that will impact your credit score. If you accept an offer, repayment information will be reported to the credit bureaus.
Payoff: Best for Paying Off Credit Card Debt
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If you’re looking to refinance higher-interest credit card debt, Payoff loans have the most competitive rates we could find among online lending platforms and peer-to-peer lenders. (Unfortunately, you can’t get a Payoff loan for any other purpose.) Payoff’s average advertised APR is just 15.49%, by far the lowest on this list and a good 5 percentage points lower than some competitors.
You can get a Payoff loan for $5,000 to $40,000, so there’s probably enough breathing room to consolidate all of your card debt and predictably space out payments. Payoff also stands out for its wide range of repayment terms—two to five years—and lack of fees. The only fee Payoff may charge is an origination fee, and that can range from nothing to 5%.
If you have good credit and less than $5,000 in credit card debt, you may want to consider a credit card to lower your borrowing costs, assuming you can pay off your debt in under two years. Some cards offer a 0% APR on transferred balances for 18 or even 21 months. Just make sure the fee (often 4% to 5%) comes to far less than what you’ll save in interest. With a $4,500 balance, such a fee would add $180 to $225 to your final bill.
Very competitive APRs
Various repayment periods
No late fee or returned payment fee
No origination fee for select borrowers
Unique financial education tools and unusual transparency about qualification process
Can’t be used for anything but refinancing credit card debt
Joint applications (so you can pay off your partner’s debt) aren’t allowed
Not available to borrowers in Massachusetts, Mississippi, Nebraska, or Nevada
Payoff Personal Loan Details
| Loan amounts | $5,000-$40,000 |
| Fixed APR Range | 5.99%-24.99% |
| Loan Terms | 2-5 years |
| Origination Fee | 0%-5% |
| Late Fee | None |
| Time to Receive Funds | For direct deposit, 3-6 business days after acceptance; for creditors paid directly, 7-30 calendar days |
| Recommended Score | Minimum FICO score may need to be 640, according to Payoff |
| Funding Source | Institutional lending partners |
Read the full review: Payoff Personal Loans
Prosper: Best for Large Loans, Best for Joint Applications
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Prosper offers loans for a wide range of uses, including debt consolidation, home improvement, and medical bills. And like Upstart and Peerform, the lender boasts a custom approach to underwriting that relies on more than traditional criteria. One of the standout features is that applicants can borrow as little as $2,000 or as much as $40,000.
Prosper charges a wide range of interest rates, up to a maximum APR of 35.99%. Unlike some competitors, though, Prosper lets you jointly apply with another borrower, giving you the chance to secure more affordable terms, assuming that borrower has better credit.
Prosper also charges a number of fees, including a loan origination fee that’s at least 2.41%. That’s significant, since 1 or 2 percentage points can add up: 1 percentage point on a $10,000 loan, for example, adds another $100 to your cost.
Wide range of loan options, including a maximum loan amount of $40,000
Joint applicants are allowed
Rates are relatively high, especially the maximum APR of 35.99%
Relatively high minimum origination fee
Borrowers with thin credit profiles aren’t eligible: you need at least three open tradelines
Prosper Personal Loan Details
| Loan amounts | $2,000-$40,000 |
| Fixed APR Range | 7.95%-35.99% |
| Loan Terms | 3 or 5 years |
| Origination Fee | 2.4%-5% |
| Late Fee | 5% ($15 minimum) |
| Time to Receive Funds | In as little as three days after you accept |
| Recommended Score | 640 |
| Funding Source | Individual and institutional investors |
Read the full review: Prosper Personal Loans
Upgrade: Best for Small Loans
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This lending platform is one of the few online personal loan lenders that offer loans as small as $1,000, and at better rates than several of the other lenders willing to make small loans. The most creditworthy borrowers will get an APR of 7.99%—even lower than what some traditional lenders charge.
For less creditworthy borrowers, however, Upgrade may offer an APR as high as 35.97%—at the high end for this list and especially high compared to some more traditional bank and credit union options. Plus, there are origination fees of 2.9% to 8%, a range higher than most of our other top picks. Since origination fees are deducted from your loan amount, an 8% fee would eat up $80 to $2,800 of your loan—even a 2.9% fee adds up.
Loans as small as $1,000
A competitive APR for smaller loans
Low late payment fee
Joint applications are allowed
Higher range of origination fees
Very high maximum APR
Upgrade Personal Loan Details
| Loan amounts | $1,000 to $35,000 |
| Fixed APR Range | 7.99% to 35.97% (lowest rates require autopay and paying off a portion of existing debt directly) |
| Loan Terms | 3 or 5 years |
| Origination Fee | 2.9% to 8% |
| Late Fee | Up to $10 |
| Time to Receive Funds | Within 4 business days of approval |
| Recommended Score | 620, according to Upgrade |
| Funding Source | Institutional lending partners |
Read the full review: Upgrade Personal Loans
LendingClub: Second Best for Small Loans
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One of the older and best-known peer-to-peer lenders, LendingClub is a good choice if you need to borrow a small amount to get you through a rough patch. Like Upgrade, LendingClub is one of the few major lenders to offer loans for as little as $1,000. (Borrowers can take out as much as $40,000, too, making this a decent option for larger amounts.)
The company offers personal loans for a wide range of uses, though they can be costly––especially for borrowers with lower scores––and there are some fees, including an origination fee of 2% to 6% and a 5% late fee. (You can also use LendingClub to refinance your auto loan or pay your doctor or dentist too, but those loans work differently.)
Despite a high maximum rate, the average LendingClub borrower is likely to get a fairly competitive rate. In the second quarter of 2020, for example, LendingClub says its average APRs were 11.58% for a three-year loan and 14.77% for a five-year loan.
You may also be able to strengthen your application by adding a co-borrower with a higher credit score. Unlike some competitors, LendingClub allows you to submit a joint application.
Loans as small as $1,000
Borrowers with lower credit scores may qualify for loans of less than $25,000
Joint applicants allowed
Very high maximum APR and relatively high minimum APR
Above-average maximum origination fee
Not available to borrowers in Iowa or in U.S. territories
LendingClub Personal Loan Details
| Loan Amounts | $1,000-$40,000 |
| Fixed APR Range | 10.68%-35.89% |
| Loan Terms | 3 and 5 years |
| Origination Fee | 2%-6% |
| Late Fee | $5 ($15 minimum) |
| Time to Receive Funds | As little as 4 days |
| Recommended Score | FICO score may be as low as 600 for loans $25,000 and under, according to LendingClub. For more than that, you’ll probably need at least a 660 |
| Funding Source | Individual and institutional investors |
Read the full review: Lending Club Personal Loans
What Is a Peer-to-Peer or Platform Lender?
A peer-to-peer lender is a company that helps connect borrowers to individuals, corporations, or other investors who have agreed to fund their loans. Similarly, when we refer to a lending platform, we mean a company that provides loans funded by banks and other lending partners.
Rather than borrowing money from just one lender, customers often receive money from multiple people or institutions. These investors are entitled to a fraction of the interest and fees the borrower pays, depending on how much they invested.
As a borrower, you won’t interact with the investors. Instead, you’ll work with the lending company in much the same way you would work with a traditional lender. The company will process your application, check your credit, and manage your loan going forward. It will also handle all of your payments and customer service inquiries.
In some cases, it could take a few weeks—from application to receipt of funds—for a peer-to-peer loan to be processed. Some lenders give investors 14 days to decide whether to fund a loan, and then you have to factor in the time to transfer the funds once you’ve accepted them.
P2P and Platform Loans vs. Other Loans
Accessible to a wide range of potential borrowers
May have more flexible approval process
For certain borrowers, may be cheaper than traditional loans
Some have extremely high maximum APRs
Origination fees are common
Fees for late payments can be higher than on traditional loans
Peer-to-peer lending companies cobble together loan money from multiple investors, then let those investors essentially pick the loans they want to help fund. A peer-to-peer lender assesses your application and then might give you a creditworthiness grade, such as “AAA,” “A1,” “BB+” or “C.”
Since the investor decides whom to help, borrowers who have struggled to get an affordable loan elsewhere may have better luck than they would with a bank or credit union, particularly if the investor has a higher tolerance for risk. (You may have to wait, though, for enough investors to pay into your loan before you can move forward.) Most P2P lenders welcome a wide range of borrowers, including those with less-than-perfect credit.
The best P2P companies and lending platforms set themselves apart with accessible loans, affordable rates, fast funding (once the investors have agreed to fund you), and easy online applications. But watch out: these lenders aren’t always the best borrowing option, especially if you have good credit. Check here for the best personal loans, or here for the best loans for borrowers with bad credit.
Some peer-to-peer lenders also claim to have fewer operating costs than traditional lenders, a savings they say they can pass on in the form of better rates. Even so, research by The Balance has found that these lenders often charge significantly higher APRs and fees than traditional lenders.
Most, for example, not only charge an origination fee (which is typically rolled into your loan’s APR), but also a late fee that’s a percentage of your outstanding payment. The fee is often 5%. If you’re late on a $250 monthly payment, 5% is just $12.50, but if you’re late on $1,000, you could be charged $50. Many banks have a cap of $39 on personal loan late fees, and credit unions, a limit of $25.
Personal loan lenders don’t have to list all their terms in one place the way credit card issuers do, so it can be a pain to research and compare your options. Using an online pre-qualification tool to get quotes can help you choose, but just remember there’s no guarantee you’ll actually be offered that rate (or even approved.)
How We Chose the Best Peer-to-Peer and Platform Loan Companies
The companies on this list offer comparatively affordable rates, lower fees (at least for a peer-to-peer or lending platform loan,) and flexible borrowing amounts. They are widely available in the U.S. and accessible to borrowers with a variety of credit scores.
We evaluated the limited number of peer-to-peer lenders and lending platforms on the market, immediately eliminating from contention any that targeted small businesses. Then we chose the best ones based on the following criteria:
- APRs (average as well as minimum and maximum)
- Fees (including origination and late fees)
- Available loan amounts
- Flexibility of repayment terms
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