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Prosper is one of the largest and best-known online personal loan lenders in the country. Catering to a wide range of borrowers, it offers loans up to $40,000 and a relatively low minimum APR. Even borrowers who don't have perfect credit may find success with Prosper since it accepts borrowers with fair credit and allows those with lower scores to apply with a joint applicant. Prosper charges a wide range of interest rates, though, including a high maximum APR. So even borrowers with strong credit could get stuck with a disappointing APR.
- Product Specifications
- Pros and Cons
- Company Overview
- APR Range 7.95% to 35.99%
- Recommended Minimum Credit Score 640
- Loan Amounts $2,000 to $40,000
- Loan Terms Three or five years
Flexible funding process
Joint applications allowed
Borrow two loans at once
High maximum APR
Good credit doesn't guarantee a lower rate
- Origination fee: 2.41% to 5.00% of loan amount
- Late payment fee: Not specified, but they are charged
- Failed payment fee: $15
Founded in 2005, Prosper has funded loans for more than 1 million people for debt consolidation, home improvement projects, engagement rings, adoption, and more. The loans that Prosper offers are funded by WebBank.
Pros of Prosper
- Flexible lending process: Multiple individual and corporate investors fund Prosper’s loans. Every investor has their own risk standard, so borrowers with damaged credit, lower Prosper ratings, and longer repayment timeframes may still be approved to borrow. Banks and credit unions, by contrast, are more likely to have stricter lending standards.
- Joint applications allowed: A joint application can make it easier for you to secure more affordable terms. The secondary borrower must meet certain qualifications including a FICO score of 600 or more. Other lenders, such as Upstart and Discover, don’t allow joint borrowers.
- Borrow two loans at once: You can take out a second loan through Prosper once you have your first loan for six months, are up-to-date on payments, and the total amount you want to borrow doesn’t exceed $40,000. Also, repeat borrowers may get rate discounts, too.
Cons of Prosper
- High maximum APR: Prosper’s 35.99% maximum APR is similar to cards for borrowers with low or no credit. It’s on par with other bad-credit lenders, too. For example, LendingPoint and OneMain Financial both have a maximum APR of 35.99%.
- Good credit doesn’t guarantee a lower rate: Even borrowers with an “A” rating from Prosper (the second-highest rating) could get APRs north of 13% on a three-year loan.
- Origination fee: Prosper deducts an origination fee between 2.41% and 5% from every loan it offers, and that fee depends on how Prosper rates you based on its in-house rating methodology. A $5,000 loan could result in $120.50 to $250 fees. This isn’t unusual for an online lender, but there are multiple lenders that don’t charge any origination fees.
Prosper Personal Loan Rates & Terms
Prosper offers fixed interest rates from 7.95% to 35.99% APR. You can borrow a personal loan and repay it over the course of either three years or five years. Other personal loan lenders offer a wider range of repayment terms, so if you need a different repayment plan, compare other personal loan lenders.
How Much Can You Borrow With Prosper?
You can borrow up to $40,000, which is less than what some personal loan lenders will approve. On the other hand, if you’re looking for a small personal loan to help finance small projects and repairs, new appliances, or other purchases, you can borrow as little as $2,000.
Prosper takes your origination fee out of your loan, so the loan amount you receive will be less than what Prosper approved you for.
Prosper Personal Loan Fees
Prosper charges four main fees:
- Origination fee: 2.41% to 5% of the loan amount, depending on your Prosper Rating and taken out of the loan funds before they’re disbursed
- Late-payment fee: A late fee applies applies, but the amount is not revealed.
- Check processing fee: 5% of your payment or $5, whichever is less, when you send in your payment by check (ACH transfer is free)
- Insufficient funds fee: $15 for each payment that is unsuccessful (so be sure your bank account can cover your payment)
Like many lenders, Prosper does not charge a prepayment fee, so you can pay off your loan at any time without a penalty.
How to Get a Personal Loan from Prosper
Prosper offers prequalification, so you can see what your personal loan rates and terms could be before you officially submit your application. This prequalification won’t hurt your credit score, either.
Like many lenders, Prosper uses its own proprietary scoring system (Prosper Score) to assess your Prosper Rating ranging from AA (least risky, where repayment is concerned) to HR (most risky). The score and rating factors in variables such as your debt-to-income ratio, number of inquiries, available credit, and the way you handled previous Prosper loans. As a result, Prosper may rate your creditworthiness differently than FICO or a credit bureau when setting interest rates.
Prosper works with borrowers with a wide range of credit scores, including those with fair credit. However, to get approved for a Prosper loan, you’ll need:
- A recommended FICO credit score of at least 640
- A debt-to-income ratio below 50%, and some form of income
- At least three open lines of credit on your credit report (such as credit cards)
- No bankruptcies in the past 12 months
- Fewer than five hard credit inquiries in the past six months
To see if you qualify, visit Prosper.com and click on “Check your rate.” Fill in your personal information and answer questions about how much you want to borrow and what you’re planning to do with your loan. Then pick your loan offer and terms. If you’re happy with your loan terms, you can submit an official application. If you’re approved, your loan will be funded and disbursed via direct deposit to your account within one to three business days.
If you have a credit score of 640 or higher and a debt-to-income ratio of less than 50%, you may have a good chance of securing a personal loan through Prosper. Prosper also offers the ability to prequalify and apply with a joint applicant, so even if your credit score isn’t the best, you’ll know if you qualify alone without hurting your score, and still have the opportunity to apply with someone by your side. Many personal loan lenders don’t allow co-signers or joint lending, so this is a unique perk of Prosper.
Prosper’s range of possible APRs is exceptionally wide, though, and can run up to around 36% APR, which is not unusual for an online bank or peer-to-peer lender, but certainly at the higher end. Most banks and credit unions, by contrast, cap rates at up to 25%. Other lenders offer lower rates, as well, so do your research before deciding whether Prosper is right for you.