A pioneer in peer-to-peer lending, Prosper is one of the largest and best-known online personal loan lenders in the country and has funded more than 1 million loans for debt consolidation, home improvement projects, engagement rings, and more. Prosper acts as a middleman of sorts, with actual funding provided by WebBank. Prosper also has an arm devoted to medical loans called Prosper Healthcare Lending. You can borrow up to $40,000 with Prosper, and the lender does allow you to apply with a joint applicant. Loans may be available to those with fair credit, so borrowers who don't have perfect credit may find success with Prosper.
- 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
- Pros and Cons
Flexible funding process
Joint applications allowed
Borrow two loans at once
High maximum APR
Good credit doesn't guarantee a lower rate
Strict late payment consequences
- Origination fee: 2.41% to 5.00% of loan amount
- Late payment fee: $15 or 5.00% of unpaid monthly amount, whichever is greater
- Failed payment fee: $15
Pros of Prosper Loans
- Flexible lending process: Prosper’s loans are funded by multiple individual and corporate investors. Every investor has their own risk standards, so borrowers with damaged credit, lower Prosper Ratings, and longer timeframes may still be approved to borrow. After all, loan repayment can be more profitable for an investor, due to the higher interest rate—as long as you stick to the loan agreement and pay your bills.
- Joint applications allowed: A joint application can make it easier for borrowers to secure more affordable terms, if the other applicant has a strong credit score of at least 600 and meets a few other qualifications. A joint applicant could also help improve the debt-to-income ratio. Other lenders, such as Upstart and Discover, don’t allow joint borrowers.
- Borrow two loans at once: If you’re successfully paying your first loan for at least six months, you can take out a second loan through Prosper. You just have to stay current on the first loan, and ensure the total amount borrowed isn’t more than $40,000. Repeat Prosper borrowers may benefit from improved interest rates, too.
Cons of Prosper Loans
- High maximum APR: Prosper’s 35.99% maximum APR is similar to what the most expensive subprime credit cards charge, and right in line with what other fair credit personal loan lenders have as their maximum APR. For example, LendingPoint and OneMain Financial both have a maximum APR of 35.99%, but they both have a recommended credit score that is lower than what Prosper suggests for borrowers. This may make it easier to qualify and receive a personal loan from other lenders whose rates are in line with Prosper’s.
- Good credit doesn’t guarantee a lower rate: If this is your first loan with Prosper or you’re hoping for a longer-term loan, you will get assigned a higher rate than if you’re a repeat borrower or only borrowing for three years. Even those with an “A” rating (the second-highest rating) could see loan interest rates north of 13% and someone with an 800 credit score could wind up with a 12.94% APR, if they’ve had a few delinquencies in the past three years.
- Origination fee: Prosper deducts a hefty origination fee between 2.4% and 5% from every loan it offers, and that fee depends on your Prosper Rating. So if you apply for a $5,000 loan, $120 to $250 will be taken out of your loan before it’s deposited. This isn’t unusual for an online lender, but there are lenders who don’t charge any origination fees.
- Strict late payment consequences: If you’re more than one day late in loan payment, Prosper reserves the right to send you to a third party or collection agency. Prosper also charges a late fee of $15 or 5% of the loan, whichever is greater.
Prosper Personal Loan Rates & Terms
Prosper offers fixed interest rates starting 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 may offer shorter or longer terms, plus some in between, 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.
Just remember—the origination fee will reduce the amount you receive when the funds are disbursed. Consider borrowing a little more to cover that fee so that you receive the loan amount you need.
Prosper Personal Loan Fees
One of the biggest downsides to a Prosper loan is the fees. Since many fees are percentage-based, the more you borrow, the higher your potential charges. Prosper charges four 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: $15 or 5% of your payment, whichever is more, when your payment is more than one day late
- 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 back your personal loan any time before the term is up.
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, since it only does a soft credit check.
Like many lenders, Prosper uses its own proprietary Prosper Score system, which it uses 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, head to 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 about 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, have a much lower interest rate cap. So even if you have less-than-perfect credit, you’re unlikely to get charged more than 18% or 25%. There are other lenders offering lower rates, as well, so do your research before deciding whether Prosper is right for you.
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