Prosper Personal Loan Review: Quick P2P Loans for Fair Credit Borrowers

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Prosper

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• Loan Amounts$2,000 – $50,000
• Loan Terms24 – 60 months
• APR Range8.99% – 35.99%
• Minimum
  Credit Score600 or above More Info

  A credit score is used to indicate the creditworthiness of an applicant, but it is only one of several factors considered for approval. These credit scores alone are not guarantees for approval and should only be used as guidelines.

Prosper is an online lending platform offering fast funding for personal loans and the option to apply with a co-borrower if your credit isn't stellar.

Unique Peer-to-Peer Personal Loans for Fair Credit Borrowers

If you’re still working on building your credit and need an affordable loan, Prosper is a good lender to consider. It’s an especially strong choice for debt consolidation loans because you can see your credit score change over time within your account. Funding time is on par with most lenders, with next-day funding available after approval. If you already have good credit though, there may be more competitive offerings out there from other lenders.

Who is Prosper Best For?

Prosper loans are best for people who have fair credit or better. It's also a good option if you want a joint borrower on your loan such as a spouse or other friend/family member who can help you build credit, as not all lenders offer this option. If you're a little leery of large financial institutions, Prosper is worth considering because it's actually a peer-to-peer lender, although that name is a little misleading since there is still a bank and lender involved. 

Like most personal loan lenders, Prosper has flexible uses for its loans. You can use your personal loan to pay for just about anything you want. Here are some common choices:

• Moving
• Medical bills
• Debt consolidation
• Weddings and vacations
• Financing a big purchase 
• Home improvement and repairs

Prosper Loan Details

Highlights and Perks

There are a few advantages to Propser personal loans:

• Joint loans allowed: You can apply with a co-borrower to help improve your chances of qualifying for a loan. In some cases, your borrowing terms may even improve if you apply with someone who has strong credit.
• Relatively quick funding: Prosper indicates that funding can take between 1-3 business days to reach your bank account, which is reasonably quick and on par with many lenders out there.
• Free FICO score updates: We also like Prosper because it provides you with a free FICO credit score update once per month. Credit card companies sometimes offer this, but it's not as common with personal loan lenders. If you have access to your credit score, you can actually see the progress you're making. That's especially helpful if you're taking out a debt consolidation loan to pay off high-interest credit card debt, which often produces the biggest positive jumps in your credit score.

Drawbacks and What to Look Out For

There are a few things we think Prosper could do better on. 

• No discounts: Prosper doesn't offer any discounts at all. Most lenders will drop your interest rate by 0.25% or more if you sign up for autopay, but Prosper doesn't offer that option. 
• Lots of fees: Compared to other lenders, Prosper charges many of them. The most annoying is the check payment fee. If you prefer to mail in a check each month to make your payment, Prosper will actually tack on an extra fee for this, which seems unnecessary. If you have excellent credit, it's relatively easy to find lenders that offer similar (or better) interest rates that don't charge any fees at all.
• No direct payment to creditors: If you're opting for a debt consolidation loan, a nice feature to look out for is a lender who sends the funds to your old creditors directly. That saves you a step from having to do it yourself, and potentially being tempted to keep some of the cash and not pay off all of the debt. Since Prosper doesn't offer this option, that's a temptation you'll have to resist and an extra step you'll have to take.

The biggest difference between Prosper and most other lenders is that Prosper is a peer-to-peer lending marketplace. That means it connects borrowers like you with people who want to fund your loan — i.e., investors. It's a nice idea that seems like it would democratize financing more, but in reality, that's not quite the way it works. 

Instead, your loan is funded by a bank just like any other personal loan (Utah-based WebBank, in this case) and then sold to Prosper, who lets investors buy portions of your loan so that they receive some of the interest you pay. So while some of your money goes towards real people like you, it doesn't quite cut out the traditional banking system entirely. 

How to Qualify

You'll need to meet these requirements to qualify for a Prosper loan:

• Age: At least 18 years old.
• Credit score: 600 or above  
• Bank account: You'll need to have your own U.S. bank account.
• Residency: U.S. residents with a Social Security Number in any state except Iowa or West Virginia.

If you're applying with a co-borrower, there are a few additional requirements to qualify:

• Credit score: Either you and/or your co-borrower must have a minimum 600 credit score. I.e., only one of you needs to be above that mark to qualify. 
• Debt-to-income ratio: Prosper doesn't specify what number you'll need to qualify, but it will combine both your monthly income and debt payment amounts together to calculate your debt-to-income ratio.
• Credit report: Your co-borrower can't have any bankruptcy filings within the past 12 months.

Prosper does allow you to have up to two loans out at once. However, you'll need to wait at least six months before applying again, and your combined Prosper loans can't total more than $50,000. If you've ever had a Prosper loan charged off (i.e., unpaid for so long that Prosper stops collection efforts) or if you've made any late payments more than 15 days past due in the previous year, you're not eligible. 

Application Process

Applying for a Prosper loan is relatively simple. Here's how it works:

• Prequalification: You'll complete a quick form on its website to get prequalified so that you can see whether you're likely to be approved and if so, what rates Prosper will charge you for your potential loan. 
• Shop around: Each personal loan lender has its own scoring formula and caters to people with different types of credit. That's why it's important to shop around; the rate that Prosper quotes you probably won't be the same as its competitors. 
• Apply for the loan: If Prosper is the best choice for you, go ahead and complete your loan application. You'll need to upload documents showing proof of your income, employment and address. Prosper will then do a hard credit check (which may temporarily impact your credit score) and verify your information. 
• Get a decision: Prosper says the loan verification phase can take up to five business days. Sometimes, they'll reach out to you for more information or supporting documents. After that, they'll make a final loan decision and, if approved, send you a contract to sign.
• Get your funds: After you've signed the loan agreement, Prosper will initiate a transfer to your bank. It can take one to three business days before you see it appear in your bank account. 
• Repay the loan: Remember to sign up for autopay. It's not required, but it's always recommended. It'll save you a lot of hassle in remembering to make the payments and prevent any late payment fees and damage to your credit score. 

Example of Loan Payments

Here are some examples of what your loan options could look like for a $10,000 loan depending on your credit score and term length. The below are just estimates and your actual monthly payment will vary based on other factors.

Reputation

Prosper has a mixed reputation. On Trustpilot, the company receives very good reviews, with a 4.6-star rating based on over 11,000 reviews. 

However, Prosper rated below average in terms of customer satisfaction in a 2022 J.D. Power survey. And while the company is accredited by the Better Business Bureau and carries an A+ rating, actual customers give it a 1.1-star rating, with some reviews citing difficulty getting their loan approved and spotty customer service. Customers have also filed over 180 formal complaints against Prosper with the Consumer Financial Protection Bureau since 2017. 

How Prosper Compares

While Prosper is a decent choice for prospective borrowers, here's how it stacks up to other competitors.

Prosper vs. LightStream

If your credit isn't the best and you only need to borrow a few thousand dollars, Prosper is a decent lender. But if your credit is a little better, then you might be better off with another lender such as LightStream.

Personal loans from LightStream come with no origination fees and an autopay discount, which can help bring borrowing costs down. Not to mention, LightStream can also disburse qualifying loans as soon as the same day you're approved.

Prosper vs. Upgrade

If your credit isn't quite up to par, Upgrade is a lender that may be willing to work with you. It has a lower credit score minimum and long repayment terms if you're looking for lower monthly payments. No to mention, its funding time is also quick.

Upgrade

• $1,000 – $50,000 Loan Amounts
• 8.49% - 35.99% APR Range

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LightStream

• $5,000 – $100,000 Loan Amounts
• 7.49% – 25.49% (with autopay) APR Range

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FAQs

• Will a Prosper loan hurt my credit?

  It depends. When you formally apply for any loan, the lender will generally do a hard credit check which can cause a small temporary drop in your credit score for a few months. If you make all of your payments on time and/or pay off the loan early, it'll generally boost your credit score in the long run though. But if you miss any payments, it'll hurt your credit score. 

• Is Prosper legit?

  Yes, Prosper is a legitimate lender. It's been around since 2005 and has provided over a million people with over $20 billion in funding. 

• Can I get a personal loan with Prosper if I have bad credit?

  It depends. You'll generally need a credit score of at least 600 to be approved, although other factors play into the mix too. If your credit is below this threshold, you may need to consider another lender or find someone to apply with you as a co-borrower who does meet the credit requirements. This means they'll be equally responsible for the loan, rather than a co-signer who only serves as a backup in case you can't pay. 

• How much can I borrow with Prosper?

  You can borrow between $2,000 – $50,000 with Prosper. You can also have more than one Prosper loan out at a time (only two, however) if it's been at least six months and you meet other requirements. The total cap for all of your Prosper loans combined is still $50,000.