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Prosper has been around since 2005 and has originated over $21 billion of loans to 1.27 million people. While personal loans are by far the core product offered by Prosper, the company also offers home equity loans and credit card products to help meet customers' full borrowing needs.
Prosper loans are different from most personal loans in the sense that Prosper is a peer-to-peer lending platform. In other words, Prosper doesn't directly loan money itself, but it connects borrowers with investors (both individuals and institutions) who invest in the loans to earn interest income. Prosper matches borrowers with investors, and also services the loans it originates.
Prosper is a solid option for borrowers with moderate to good credit, but it does have a few drawbacks, including potentially high APRs and origination fees.
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This personal loan is a good fit for: Borrowers with moderate to strong credit histories who need to borrow up to $50,000.
Prosper offers several features that might appeal to personal loan borrowers, and just to name a few of the standouts:
Wide range of loan amounts: Prosper offers personal loans in amounts ranging from $2,000 to $50,000. While the $50,000 upper limit isn't exactly the highest in the industry, it is sufficient for most borrowers. And on the lower end, $2,000 is less than many competitors are willing to loan.
Next business day funding: Prosper funds its loans as soon as one business day following final loan approval. To be clear, this is when Prosper sends the money -- the timetable for it to actually show up in your bank account depends on their processes as well.
Easy to check rates online: Prosper makes it easy for borrowers to get personalized rate offers without affecting their credit score. The online pre-qualification process takes just a couple of minutes and performs a soft credit check to reveal a variety of loan options.
Co-borrowers are allowed: Prosper is among the few personal lenders that allow joint loan accounts. For example, if you and your spouse wanted to apply for a loan together, that's an option. Or, if your credit isn't particularly strong, you can use a creditworthy co-borrower to qualify for better loan terms.
Several loan purposes: Prosper offers personal loans for three specific purposes -- debt consolidation, healthcare expenses, and home improvements. The process of getting these loans are identical to one another, all have the same loan minimums and maximums, and in all cases the money is distributed to the borrower's bank account just one business day after accepting a loan offer. It's also worth noting you can use personal loan proceeds for just about anything you want -- after all, the entire concept of personal lending is that the loan isn't backed by any specific asset (like a mortgage is backed by a home).
There's no such thing as a perfect lender for everyone, and Prosper isn't an exception. While there are several things to like about Prosper's lending process, here are a few potential drawbacks:
High APR range: The APR given to each particular borrower depends on a variety of factors, but Prospers rate on both the low and high ends of the spectrum are relatively high. And to be clear, these APRs include Prosper’s origination fee.
Origination fees: All loans made by Prosper have origination fees, which vary from 1% to 7.99%, depending on the borrower. These are included in the quoted APR, but the important thing to understand is that these origination fees are deducted from the loan proceeds before they are distributed. In other words, a $10,000 loan with a 5% origination fee would result in $9,500 being deposited into your bank account.
No guarantee of loan funding: As Prosper is a peer-to-peer lending platform, it relies on individual and institutional investors to fund loans. Because of this, even if you're approved for a loan, there’s no guarantee your loan will have enough backers in a timely manner, or even at all. This is rarely an issue in practice, but it's worth noting.
In order to qualify for a personal loan through Prosper, you must be a creditworthy borrower, meaning that your income, other debts, and credit situation meet Prosper's minimum standards. And while it is only one piece of the puzzle, Prosper makes it clear that a credit score of 560 or higher is needed to qualify. To sum it up, here's what you'll need to qualify for a personal loan:
If you don't have all of these qualifications, it's also worth mentioning that Prosper allows co-borrowers. This means that if you don’t qualify on your own, you can apply along with a creditworthy individual in order to meet these requirements. It also means that if you want to, you can apply for a loan jointly, such as with a spouse.
Prosper's application process is similar to that of most personal lenders:
It's also worth mentioning that if you decide to accept a personal loan offer through Prosper, a hard credit inquiry will take place as part of the final approval process. This is standard practice throughout the industry.
Prosper personal loans aren't right for everyone, as they have relatively high origination fees and a higher APR range compared to most rivals. However, with the ability to check your loan offers for free, Prosper is a solid lender to include on your short list.
While Prosper considers an applicant's entire list of qualifications, it requires a minimum credit score of 560 to consider someone for a loan.
A credit score requirement of 560 is certainly on the lower end for the personal loan industry, so as long as an applicant has credit above this threshold, stable employment, and a debt-to-income ratio that meets Prosper's standards, it isn't terribly hard to get a loan. It's also worth mentioning that Prosper allows co-borrowers, so even if an applicant doesn't meet the standards, they can still get a loan along with a joint applicant.
Obtaining a new personal loan from Prosper (or anywhere else) can hurt your credit in the short term. New accounts and credit inquiries are two potentially negative items in the FICO® Score formula. However, any negative impact is likely to be temporary, as long as you pay your loan on time every month. In fact, making regular payments on an installment loan can be a great way to build credit over time.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
*SoFi Personal Loan Disclaimer
Fixed rates from 8.99% APR to 29.99% APR reflect the 0.25% autopay interest rate discount and a 0.25% direct deposit interest rate discount. SoFi rate ranges are current as of 02/06/2024 and are subject to change without notice. The average of SoFi Personal Loans funded in 2022 was around $30K. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors.
Loan amounts range from $5,000–$100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0%-7%, which will be deducted from any loan proceeds you receive.
Autopay: The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi.
Direct Deposit Discount: To be eligible to potentially receive an additional (0.25%) interest rate reduction for setting up direct deposit with a SoFi Checking and Savings account offered by SoFi Bank, N.A. or eligible cash management account offered by SoFi Securities, LLC (“Direct Deposit Account”), you must have an open Direct Deposit Account within 30 days of the funding of your Loan. Once eligible, you will receive this discount during periods in which you have enabled payroll direct deposits of at least $1,000/month to a Direct Deposit Account in accordance with SoFi’s reasonable procedures and requirements to be determined at SoFi’s sole discretion. This discount will be lost during periods in which SoFi determines you have turned off direct deposits to your Direct Deposit Account. You are not required to enroll in direct deposits to receive a Loan.
Impact to credit score: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
*Upstart Loan Disclaimer
The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 21.97% and 36 monthly payments of $35 per $1,000 borrowed. For example, the total cost of a $10,000 loan would be $12,646 including a $626 origination fee. APR is calculated based on 3-year rates offered in the last 1 month. There is no down payment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application.