Prosper Personal Loans Review

Prosper is a financial platform that connects borrowers looking for personal loans with private investors who fund them. The peer-to-peer marketplace has coordinated and serviced more than $16 billion in loans since its inception in 2005.

Prosper personal loans offer competitive fixed-term loans ranging from $2,000 to $40,000 that can be used for a wide variety of purposes.  Instead of being funded by a lender directly, you apply and private investors can view your application and decide to fund it in exchange for interest earnings. While this can cause a longer initial funding period, the borrowing experience doesn’t differ much from traditional personal loans.

Pros

  • Able to change your payment date
  • No prepayment penalty
  • Flexible eligibility requirements

Cons

  • Charges an origination fee up to 5%
  • Late fees based on your unpaid balance
  • APR maximum is on the high end

Prosper by the numbers

  • APR range: 6.95%-35.99%
  • Min-max loan range: $2,000 to $40,000
  • Repayment term range: 36 to 60 months
  • Minimum credit score: Not specified
  • Minimum gross income: Not specified
  • Better Business Bureau grade: A+

Fees

  • Origination fee: 2.4% to 5%
  • Late payment fee: $15 or 5% (whichever is greater) of the unpaid monthly payment amount
  • Check processing fee: $5 or 5% of your payment (whichever is lesser)
  • Returned payment fee: $15 for each instance

Restrictions

  • Can’t be used for college tuition or other postsecondary educational expenses

Who should consider Prosper personal loans?

A Prosper loan can be a good fit for those with good credit who want to borrow money and who aren’t necessarily in a time crunch. Further, if you need to borrow less or more than the loan amount range, other lenders will better suit your needs.  Prosper is also very flexible when it comes to how the loan proceeds can be used. You can use the loan for pretty much any needs you have, including business purposes, with the exception of paying for post-secondary education expenses. 

Who should avoid Prosper personal loans?

You may want to look elsewhere if you need money in a hurry. The Prosper application and funding process can take quite some time. Prosper’s investors have up to 14 days to invest in your loan and then you’ll have an additional waiting period after getting your approved status. 

Additionally, as Prosper relies on outside investors to fund loans, there’s no guarantee your loan will be funded even if you meet all requirements. Your loan has to be at least 70% funded within 14 days or your application will be denied. If you have concerns about your financial history or current situation, you may want to spend your time and effort applying with a traditional lender that doesn’t rely on outside funding sources to make a loan decision.

How to apply for a Prosper personal loan

Here’s what to expect when applying for a Prosper loan.

  1. Resolve issues that may prevent your application from being approved. Check each of your credit reports for any errors, and work with your lenders to resolve any delinquent payments or other negative marks.
  2. Check to see if you meet Prosper’s minimum criteria. Prosper requires a debt-to-income ratio below 50%, stated income more than $0, no bankruptcies within the last 12 months, less than five credit inquiries in the last six months and at least three open trades reported on your credit report.
  3. Get your estimated rate on Prosper’s website. You’ll need to answer basic questions about yourself, including your name, address, date of birth and other personal information. You’ll also need to provide details about your credit and financial history. Prosper will do a soft credit pull and may require access to your checking account to gain a better understanding of your full financial picture.
  4. Choose from a list of loan options. Prosper will provide you a list of investor offers that match your financial situation. Your offer is based on your Prosper Rating score, which provides a consistent evaluation of your level of risk for lenders to review.

Alternatives to Prosper personal loans

What if Prosper is not your best option? Here are a few alternatives. 

Avant

Avant personal loans may be a good option if you are having trouble getting approved with Prosper as Avant’s average borrowers have credit scores as low as 600. Additionally, the lender has a faster funding time, typically depositing funds the business day following approval. Avant loans range from $2,000 to $35,000 with APR from 9.95% to 35.99% and an origination fee of 4.75%. While the lender does have a higher starting APR, it still may be a good fit if it’s your only option or if the lender ends up offering the best rate amongst other lenders.

Earnest

If you need to take out more than Prosper’s $40,000 maximum limit, Earnest offers personal loans up to $75,000 that can be used for a wide variety of expenses, including credit card debt consolidation and home renovations. Additionally, one of the main advantages Earnest offers is no origination fees. Considering Prosper may charge an origination fee up to 5%, this could offer significant savings. Furthermore, Earnest considers plenty of factors when making its lending decision, such as income, education level, savings and payment history. However, a credit score of 650 is required to be approved.

SoFi

Lastly, if you have excellent credit, SoFi is an alternative option that could offer you a higher loan amount, a lower APR, faster funding and fewer fees. The lender provides loans up to $100,000 without the common miscellaneous fees that come with personal loans, like origination fees and late fees. SoFi also includes each of its customers in its membership, providing opportunities for networking and socializing so customers can find new jobs and make connections in their areas. Career-coaching is also available with SoFi, making it an all-encompassing financial wellness and lending company. 

Jessica Walrack

Contributing Writer

Jessica Walrack is a personal finance writer at SuperMoney, Interest.com, The Simple Dollar, and PersonalLoans.org. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.