Business Insider's personal finance team compared Prosper's personal loans to the best personal loan companies and found them to need improvement due to the complicated fee structure, limited eligibility, and non-competitive interest rates.
Prosper Personal Loan Overview
8.99% to 35.99%
$2,000 to $50,000
560
- Able to add coborrower
- Offers loans for a variety of uses
- Many requirements to qualify
- Prosper may not find an investor for your loan
- Origination and late fee
- Loan amounts range from $2,000 to $50,000
- Loan term lengths are either three or five years
- Origination fee between 1% to 5%, depending on your financial situation
- Late fees are 5% of the payment amount or $15, whichever is greater
- Loans made from Prosper’s banking partner WebBank
What Are Prosper Personal Loans?
Prosper Prosper Personal Loan is a good lender if you're looking to apply for a joint loan or don't have the best credit score. But with its lengthy list of fees and stringent eligibility requirements, you might get a better deal elsewhere. The best personal loan for you depends on your credit score, which will determine what you qualify for and can lower your rate.
Key Features and Benefits
Prosper loan amounts range from $2,000 to $50,000, and the company offers loans to residents of all 50 states and Washington, DC. You'll need a minimum credit score of 560 to qualify for a Prosper Prosper Personal Loan personal loan. Remember, the higher your credit score, the better APR you will likely receive.
You will receive an APR between 8.99% to 35.99% with Prosper, depending on your creditworthiness and ability to repay the loan, among other factors. You can apply with a co-borrower and potentially be eligible for a lower rate if their credit score is better than yours.
You can take out a loan for either two, three, four, or five years. Most loans from Prosper Prosper Personal Loan are approved within one day, and depending on your bank, it may take one to three business days to receive funds in your bank account.
You may pay multiple kinds of fees with a Prosper loan, including an origination fee, a check payment fee, a late fee, and an insufficient funds fee. Prosper does not charge a prepayment fee if you repay your loan early.
Prosper Personal Loan Terms and Rates
Interest Rates and APR
Prosper Personal loan APRs range from 8.99% to 35.99%; applicants with strong credit scores have a better chance of earning low interest rates.
Loan Amounts and Terms
Prosper Personal Loan amounts can range between $2,000 to $50,000, with loan terms available from two to five years.
Prosper Personal Loans Eligibility and Application Process
Eligibility Requirements
To be eligible for a Prosper Personal Loan, borrowers must:
- Have a valid Social Security number
- Have a verifiable bank account
- Have a minimum credit score of 560
- Have a maximum debt-to-income ratio of 50%, excluding mortgage
- Be a US or permanent resident
- Be at least 18 years old
- Live in an eligible state (All U.S. states except Iowa and West Virginia are eligible.)
- Have some form of income, such as employment, self-employment, retirement, unemployment, or other cash flows
Step-by-Step Guide to Applying for a Prosper Personal Loan
1. Decide how much you want to borrow. Choose your desired loan amount, as well as your loan's purpose. You'll also enter your name, Social Security number, and income history. You'll get an estimated monthly payment and APR range.
2. Formally send in an application and await approval. When submitting a formal application, you may need to send in proof of income, like a W-2, tax returns, or other financial documents.
3. Wait for an investor to fund your loan. For you to get your money, a Prosper investor must choose to fund your loan. Prosper is a peer-to-peer lending company that connects borrowers and investors. Per the company's website, investors usually will agree to offer funding before the approval process is completed (in three days or less). But they have up to two weeks to invest in your loans. If your loan does not garner at least 70% funding after 14 days, then the company will deny your application.
4. Make a plan to repay your loan. Work your monthly payments into your budget and ensure you have the financial standing to pay back your debts.
Prosper Loan Fees and Costs
Are There Any Fees?
Unlike other borrowing options out there, you will encounter an origination fee with your Prosper Personal Loan. Your origination fee will be deducted from the whole loan amount, so you don't need to worry about making a separate payment.
Prosper does not charge prepayment penalties, so you won't be charged any fees for paying off your loan early. However, Prosper does charge late payment fees, check payment fees, and insufficient funds fees.
Understanding Origination Fees, Late Fees, Insufficient Funds Fees, and Check Payment Fees
An origination fee is a one-time processing fee, between 1% and 9.99% of the loan amount, that's deducted from your overall proceeds before you receive them. You'll encounter late fees if you haven't made your full monthly payment within 15 days of its due date, and this amount will be either $15.00 or 5% of the unpaid monthly payment, whichever sum is greater.
Insufficient funds fees, also known as returned payment fees, are issued when there are insufficient funds in your account when your payment is withdrawn or if your account cannot be accessed at all. This is a $15 fee and is issued after each failed payment attempt.
Check payment fees are additional fees you must pay with your monthly payment if you pay by check. This fee is $5 or 5%, whichever is less. Check payment fees take effect when the check is received, not sent out, which can lead to late fees for some if payments are not planned properly.
Prosper Loan Customer Experience
User Reviews and Ratings
Prosper has earned 4.6/5 stars on TrustPilot, with most borrowers praising the speed with which they were issued their loans, the ease of the application process, and excellent customer service. Prosper also has an A rating with the Better Business Bureau.
Common Praises and Complaints
Most of the negative reviews on TrustPilot and the Better Business Bureau highlight Prosper's exorbitant fee structure. Other complaints note inconsistent communication and borrowers having a hard time getting approved.
Customer Service
Prosper loan customers can contact the company via phone Monday-Friday from 5 a.m. to 5 p.m. PT. Many other lenders offer customer service via phone on the weekend. Customer service is also available via email.
8.99% to 35.99%
$2,000 to $50,000
560
- Able to add coborrower
- Offers loans for a variety of uses
- Many requirements to qualify
- Prosper may not find an investor for your loan
- Origination and late fee
- Loan amounts range from $2,000 to $50,000
- Loan term lengths are either three or five years
- Origination fee between 1% to 5%, depending on your financial situation
- Late fees are 5% of the payment amount or $15, whichever is greater
- Loans made from Prosper’s banking partner WebBank
Who is a Prosper loan best for?
Ideal Scenarios for Using a Prosper Personal Loan
Prosper is best for borrowers with less-than-stellar credit scores who want to add co-borrowers to their loan applications. Not all lenders allow co-borrowers, and Prosper is a solid option for those who need one. This could be a useful feature if you and your partner are looking into home renovation loans, for instance. Prosper is also a top pick in our guide to the best low-interest personal loans.
Additionally, borrowers who don't need their money as quickly may be ok with the lender's funding speed, which can sometimes be slower than comparable lenders.
How to Use a Prosper Personal Loan for Debt Consolidation
Prosper offers personal loans designated specifically for debt consolidation, ranging between $2,000 to $5,000, with repayment terms of two to five years. When borrowing a personal loan for debt consolidation with Prosper, they'll provide you with a team of people to help you strategize your consolidation and subsequent repayments.
Other Common Uses for Prosper Personal Loans
There are several wise uses for a personal loan. Aside from debt consolidation, Prosper suggests using your personal loan for home improvement and renovations, financing expensive healthcare costs, paying off household expenses, financing a car purchase or auto repairs, or any other sizable expense you have coming up.
Prosper Personal Loan Alternatives
Prosper Personal Loans vs. LendingClub Personal Loans
Both Prosper and LendingClub will charge you an origination fee. Prosper's origination fee varies between 1.00% to 9.99% of your total loan amount, while you'll pay a fee of 3% to 8% with LendingClub. This fee will be included in your overall APR and will be deducted from your loan proceeds.
You may get your funds marginally faster with Prosper than with LendingClub. Prosper will often take between one to three days to send you your money, while LendingClub may take between two to four business days. However, remember that Prosper will not send you any money until they have an investor to back your loan.
Prosper has a minimum credit score requirement of 560 to qualify for a loan, while LendingClub's requirement is unspecified. If your credit score is below 560, you might decide to add a co-borrower with Prosper or pivot to LendingClub.
Read our LendingClub personal loans review.
Prosper Personal Loans vs. Avant Personal Loans
Prosper has a minimum credit score requirement of 560, while most of Avant's customers have a credit score between 600 and 700. Both companies offer loans to people with fair credit, but if your score is on the lower end of the "fair" threshold, you may have better luck with Avant.
Both Prosper and Avant have mobile apps to manage their personal loans on the go.
Read our Avant personal loan review.
Prosper Personal Loan Pros and Cons
Advantages
- Ability to add a co-borrower to your account. If your credit score isn't in the best shape, you can apply for a joint loan for a better rate.
- Many ways to use your loan. Prosper allows you to use your loan funds for anything from home improvement to taxes to adoption.
Disadvantages
- May be difficult to qualify. You may have trouble meeting all of Prosper's qualifications for a personal loan, particularly if your finances aren't in great shape. These include a debt-to-income ratio below 50% and fewer than nine credit bureau inquiries (excluding duplicate inquiries) within the last six months.
- Prosper may not find an investor for your loan. If your loan does not receive at least 70% funding from an investor after 14 days, Prosper will deny your application. The company says more than 99% of loans receive funding within the 14-day window.
Prosper Personal Loan FAQs
The main benefits of Prosper Personal Loans include flexible loan terms, a quick and easy online application process, and the ability to use the loan for various purposes. Prosper also offers a peer-to-peer lending model, which can benefit borrowers with diverse credit profiles.
Prosper Personal Loans are similar to other personal loans due to their decent interest rates and flexible loan terms. However, Prosper's peer-to-peer lending model provides unique advantages and can result in more personalized loan terms and potentially lower rates for qualified borrowers.
Prosper charges an origination fee, late payment fees, check payment fees, and insufficient funds fees. It does not charge prepayment penalties.
Applying for a Prosper Personal Loan will not impact your credit score. However, if you're approved and choose to proceed with the loan, a hard credit check will be conducted, which can impact your credit score.
You are eligible for a Prosper Personal Loan if you're a US citizen or permanent resident, at least 18 years old, and have a minimum credit score and income level as specified by Prosper. Specific criteria may vary, so check Prosper's official website for information.
To maximize the benefits of a Prosper Personal Loan, use it for something that provides the most value. This could be consolidating high-interest debt or making home improvements that add to your property's value. Making timely payments can help you avoid late fees and will improve your credit score in the process. Additionally, take advantage of any special offers or promotions.
Why You Should Trust us: How We Rated Prosper Loans
We rated Prosper, and all personal loan products, on a scale of 1-5 scale, with the overall rating being a weighted average factoring in seven different categories, with some judged more heavily than others. Each category's weighting is based on its importance to your borrowing experience. These categories are:
- Interest rate (20% of rating)
- Fees (20% of rating)
- Term lengths and loan amounts (15% of rating)
- Funding speed (15% of rating)
- Borrower accessibility (15% of rating)
- Customer support (7.5% of rating)
- Ethics (7.5% of rating)
See more on how we rate personal loans »
