Prosper Personal Loans Review: A Great Financing Option

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Prosper is an online lending marketplace that matches borrowers with investors. Borrowers submit their loan application and upon approval, choose their loan amount, and then find a number of online marketplace lender options based on their qualifications.

When looking for a personal loan, make sure you check out our list of the best personal loan companies. Depending on your situation, you might be surprised by what’s out there.

Quick Summary

  • Peer-to-peer lending marketplace
  • Fixed terms: three or five years
  • No prepayment penalties
  • Unsecured loans from $2,000 to $40,000
  • Charges origination fee as a percentage of the loan

What Loans Does Prosper Offer?

Prosper provides unsecured, fixed-rate, simple interest, fully amortized personal loans. These loans can be used for debt consolidation, home improvements, and many other personal uses. Loan amounts vary from $2,000 to $40,000.

Loan types offered include the following:

  • Debt consolidation
  • Home improvement
  • Short-term bridge
  • Auto and vehicle
  • Small business
  • Baby and adoption
  • Engagement ring financing
  • Special occasion
  • Green loan
  • Military

Who Qualifies for a Loan from Prosper?

Prosper allows you to check your rate online instantly. All are welcome to apply.

Prosper uses a proprietary algorithm along with credit information provided by TransUnion. Applicants may be denied based on information from the application or credit bureau information. If an applicant is denied, they will need to wait 120 days before applying again.

An applicant may be given pre-approval status. Pre-approval does not mean the applicant has been approved for a loan, as it is a not a final offer. Applicants must go through the entire application process so creditworthiness can be checked. Upon approval, Prosper works with WebBank to underwrite the loan.

Minimum eligibility criteria include:

  • “Debt‐to‐income ratio below 50%”
  • “Stated income greater than $0”
  • “No bankruptcies filed within the last 12 months”
  • “Fewer than five credit bureau inquiries within the last 6 months”
  • “Minimum of three open trades reported on their credit report”

“Repeat borrowers must meet several additional criteria:”

  • “No previous loans on the Prosper platform which have been charged‐off”
  • “Must not have been declined for a loan through Prosper within the last four months due to delinquency or returned payments on a previous loan through Prosper”

Approved loans have their funds submitted by the originating bank on the same day as the loan origination. It can take one to three business days to receive funds depending on the applicant’s bank.

What Are the Rates and Terms on the Loans?

APRs on Prosper loans range from 5.99% to 36% for first-time borrowers with the lowest rates for the most creditworthy borrowers. Loan terms are from three to five years.

To get an idea of what a payment may look like, a 3-year $10,000 loan with a 5.99% APR would have 36 scheduled monthly payments of $302. A 5-year $10,000 loan with a 9.68% APR would have 60 scheduled monthly payments of $201.

For each loan, interest accrues on the principal balance daily.

Is There Any Concerning Fine Print?

There isn’t really anything concerning in the fine print. Prospers seems to be upfront about its loan policy and terms. Loan fees can be found in its website help section. Some fees to note include:

  • Origination fees range from 2.4% to 5% and are included the in the APR.
  • A late fee is incurred 15 days after the due date. The assessed amount is $15.
  • Insufficient funds are $15 for each returned or failed payment.

When Does a Loan from Prosper Make Sense?

Using Prosper loans is similar to using a credit card. Both are unsecured. The difference with Prosper is that the loan rate is fixed. Prosper loans can be used for a wide range of needs, as mentioned above. So when does it make sense to take out a Prosper loan?

Instead of financing a purchase on a credit card, which can have a fluctuating rate, Prosper may be a better alternative because of its fixed rate. With loan terms of three to five years, you should have plenty of time to pay off the purchase.

Of course, if you have poor credit, your rate will be high. It will likely be comparable to that of a credit card. In this case, Prosper may still make sense because loans have a fixed interest rate.

Because the loan origination fee is included in the loan APR, it makes comparing the Prosper loan with a credit card very easy. Whichever of the two that has the lowest APR is the best deal.

Final Thoughts

If you are short on cash, have an emergency, or don’t have any options for financing a needed purchase, Prosper can be a good choice. With its fixed APR, there aren’t any surprises. Origination fees are included in the quoted APR that you receive after filling out an application.

While not everyone will qualify, those who do will have a great financing option.

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