Peer-to-Peer Lending: Best Loans of 2020

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.

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 a loan. (Even still, Upstart says its average borrower has a 689 FICO score—on the lower end of the “good” range.) 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 a competitive loan, 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 lender 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.

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 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 $35,000, 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%.

Payoff is not the best place for first-time borrowers, however. In order to get approved, you’ll likely need at least three years of credit history with at least at least two open tradelines (like credit cards or lines of credit) that are in good standing to get approved.

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.

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.

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.)

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.