If you want to consolidate debt, finance a large purchase, or cover an emergency expense, a personal loan can be useful. However, many personal loan lenders require borrowers to have good or excellent credit, making it difficult to qualify for a loan. If your credit is in the fair range or below, you may have a better chance of getting a loan—and a better rate—by working with a peer-to-peer lender.
P2P lenders work with multiple investors to fulfill loans, increasing your odds of qualifying for a loan. You can usually apply online and get a decision quickly. If approved, your loan can be disbursed within a few days.
However, peer-to-peer loans can have higher interest rates and more fees than traditional loans, so carefully review lender terms. To help with your research, we evaluated multiple companies and selected the best peer-to-peer loans available now.
Best Peer-to-Peer Loans of January 2023
The companies on this page are no longer true P2P lenders—they now connect borrowers with institutional investors, like banks, rather than individual investors. They serve a similar purpose, and may still offer loans for people with fair or worse credit, but loan approval is now based on the decisions of large institutions rather than individuals. This could affect the likelihood of qualifying, but many borrowers may not notice the difference. There may still be some true P2P lenders, but none made our best list.
Best Overall : Prosper
- APR Range: 6.99% - 35.99%
- Time To Receive Loan: 1 day
- Loan Amount: $2,000 - $50,000
While most personal loan lenders require borrowers to have good to excellent credit, Prosper is willing to work with borrowers with less-than-perfect credit. It accepts borrowers with credit scores in the “fair credit” range and also allows joint applicants. And Prosper has outstanding customer reviews.
Allows joint applications
Accepts borrowers with fair credit
Quick loan disbursement
Charges origination fees
Only two repayment term options
Payments by check incur additional fees
Prosper is our choice as the best overall peer-to-peer lender because it works with borrowers with fair credit and offers a wide range of loan amounts. Its minimum credit score is just 640, and it allows borrowers to submit joint applications with co-borrowers. If you don’t meet the lender’s requirements on your own, adding a co-borrower with good credit can increase your chances of qualifying for a loan.
Individuals can borrow up to $40,000 to consolidate debt or finance major expenses, and they can get their money in one to three business days.
Prosper has outstanding reviews from customers. It has a score of 4.7 out of five on Trustpilot with over 8,700 reviews, putting it in the “Excellent” category.
However, Prosper charges origination fees. Depending on your risk rating, your fee can be 2.40% to 5.00% of the loan amount. Prosper also charges fees if you make your payments via check; the check payment fee is the lesser of $5 or 5% of your loan payment amount.
Prosper is one of the few consumer loan companies that still allow individual investors. You can invest with as little as $25, and Prosper’s average historical return is 5.7%. However, not everyone is eligible to invest with Prosper. Only residents of certain states can qualify and, depending on where you live, you may have to meet state suitability standards to invest.
Best for Crypto : MyConstant
- APR Range: 6.00% - 7.00%
- Loan Amount: $50 - $50,000
MyConstant is our choice for the best P2P crypto loans because it allows borrowers to use their cryptocurrency holdings as collateral and borrow money at relatively low-interest rates—all without having to sell their crypto.
No credit checks
Borrow fiat currency or crypto
Relatively low interest rates
Very short repayment terms
Margin calls may apply
High late fees and matching fees
MyConstant is a fairly unique P2P platform, allowing borrowers to borrow against their cryptocurrency holdings to get up to $50,000 in a single order. You can opt to borrow fiat currency—such as U.S. dollars—or borrow in the form of cryptocurrency.
The lender offers low-interest rates compared to the typical unsecured personal loan; you can qualify for a loan with APRs starting at just 6.00%.
Unlike other lenders, MyConstant doesn’t perform credit checks, so it can be a good option if you have poor credit or limited credit history.
However, there are some downsides to MyConstant’s crypto-backed loans. They have very short repayment terms; the maximum loan term is just 180 days. The lender also has a 10% late fee and a 3.5% matching fee for borrowers.
Like other crypto-backed loan companies, another risk with MyConstant is the potential for margin calls. Cryptocurrency prices can be volatile; if the value of your loan’s collateral dips below a certain threshold, MyConstant may require you to add to your collateral or repay the loan early. If you don’t take action within a specific timeframe, MyConstant will liquidate your collateral to repay its investors.
Best for Small Business : Funding Circle
- APR Range: 5.99% - 16.49%
- Loan Amount: $25,000 - $500,000
If you are a small business owner, getting funding may be challenging. But with Funding Circle, you can borrow up to $500,000 for your business and receive your funds in as little as 48 hours.
Pre-qualification tool available
Multiple credit options
Quick loan disbursement
Charges origination fees
Requires good to excellent personal credit
Not available in Nevada
Funding Circle is a peer-to-peer lending platform specifically designed to provide loans to small businesses. Since its launch in 2010, investors have issued $18.4 billion in loans to over 120,000 businesses globally.
It’s our pick as the best peer-to-peer lender for small businesses because it offers quick loan disbursement and multiple credit options. Business owners can apply for business term loans, Small Business Administration (SBA) 7(a) loans, and business lines of credit.
Funding Circle’s business term loans range from $25,000 to $500,000, and borrowers can select terms ranging from six months to five years. The lender has a pre-qualification tool, so you can find out if you’re eligible for a loan without undergoing a hard credit inquiry.
Before applying for a loan from Funding Circle, keep in mind that the lender charges origination fees. The fee is 5.99% of the loan amount.
Not everyone will qualify for a small business loan. Funding Circle doesn’t issue loans to businesses located in Nevada, and it requires borrowers to have a personal credit score of 660 or higher. Plus, businesses must be in operation for at least two years.
Compare the Best Peer-to-Peer Loans of January 2023*APR ranges for some companies include a discount for automatic payments or existing bank customers.
There are fewer peer-to-peer lenders offering consumer loans than in years past, but they can still be useful options for eligible borrowers. If you’ve struggled to qualify for personal loans or business loans because of your credit, you may have a better chance of getting a loan by working with a peer-to-peer lender.
Prosper is our choice as the best overall P2P lender because of its available loan amounts and relatively low credit requirements. However, if you want a higher loan amount—or need more time to repay the loan—you’ll need to find another lender or funding avenue, such as crowdfunding.
And, if you have good credit and stable income, you may qualify for lower rates if you get an unsecured personal loan from a bank, credit union, or online lender. Get quotes and compare rates from our selections of the best personal loan lenders.
Guide to Choosing the Best Peer-to-Peer Lending Websites
Why Should You Use a Peer-to-Peer Loan?
Peer-to-peer lenders are best for borrowers that may struggle to qualify for loans from traditional banks and lenders. P2P lenders have more relaxed borrower requirements, making it more likely that you’ll qualify for a loan.
They can also be a good fit for borrowers that need to borrow money and who are ineligible for other types of financing. For example, entrepreneurs that are launching small businesses are unlikely to qualify for traditional business loans, so P2P loans can be a valuable alternative.
When deciding which loan type is best for you, keep in mind that peer-to-peer loans can have higher-than-average interest rates and added fees, such as origination fees, that can add to your overall cost.
Comparing Peer-to-Peer Loan Lenders
When comparing loan offers from peer-to-peer lenders or any personal loan lender, there are a number of factors to consider:
- APR: The APR is the total cost you pay to borrow money, including interest rates and fees. The higher the rate, the more you’ll pay. The average APR for a loan with a 24-month term was 10.16% in August 2022, but your rate is determined by your credit score, income, debt history, and selected loan term.
- Loan Terms: The loan term is how long you have to repay the loan. Most personal loans have terms of five years or less. A shorter-term will give you a higher monthly payment, but you’ll also likely get a lower interest rate and a lower overall repayment cost.
- Origination Fees: An origination fee is charged by some lenders—but not all. The fee is a percentage of your loan amount; for example, a $1,000 loan with an 8% origination fee would add $80 to your loan cost (or it may be deducted from your loan proceeds).
- Prepayment Penalties: Some lenders charge prepayment penalties if you pay off your loan sooner than is stated in the loan agreement. When comparing lenders, make sure there is no prepayment penalty to avoid those costs.
- Minimum Credit Score: The minimum credit score is the score you need to qualify for a loan from a particular lender. In general, P2P lenders look for scores in the fair to excellent range, meaning a score of 580 or above.
- Collateral: If you have less-than-perfect credit, some personal loan lenders offer secured loans. You use property, such as a car, as collateral for the loan. Using collateral increases your odds of qualifying for a loan and securing a better interest rate.
- Loan Disbursement: While some lenders will disburse your loan as soon as the next business day after approving your application, other lenders can take several days (or more). If you need the money fast, make sure you select a lender that offers quick loan disbursement.
How to Apply for a Peer-to-Peer Loan
Most P2P lenders offer pre-qualification tools that allow you to check your eligibility for a loan and view sample rates and repayment terms without affecting your credit score. If you decide to proceed with the loan application, you can usually complete it online.
To apply for a personal loan you’ll need to provide your personal information, including:
- Your name
- Social Security number
- Employer information
The lender will review your application and perform a hard credit inquiry. If approved, the P2P lender will assign you a risk category and submit your information to its investor platform. Its investors can review that information and make a bid to fund the loan.
Because lenders usually work with institutional investors, such as banks and credit unions, this process is relatively fast, and your loan can be funded and disbursed within a few days.
How Can I Invest and Make Money With P2P Loans?
While P2P lending used to be an attractive way to earn a higher rate of return than stashing money in a savings account, there are fewer options for individual investors now.
Few P2P companies allow individual investors to invest and fund loans; Prosper is one of the few left that allows individual investors to fund consumer loans. With Prosper, you can get started with a minimum investment of just $25.
Other options include:
- Kiva: Kiva is a P2P lender that issues loans to people across the globe that may struggle to get financing elsewhere. You can invest as little as $25 to help people get small businesses off the ground and support their families.
- Fundrise: Fundrise is a way to invest in a diversified portfolio of commercial and residential real estate, and you can start with just $10.
- PeerStreet: Like Fundrise, PeerStreet is a P2P lender focused on real estate. Individual investors can contribute to home offers, bridge loans, and investment property loans. However, it has a higher minimum to start investing at $1,000.
Frequently Asked Questions
What’s the Difference Between P2P and Crowdfunding?
P2P loans and crowdfunding are both ways to get a lump sum of cash from many people. But how these financing options work is quite different.
A P2P loan is usually based on creditworthiness, and it must be repaid with interest over a set loan term.
By contrast, crowdfunded funds don’t have to be repaid, and because people decide to donate to the fund based on the service it offers or the cause it supports, crowdfunding doesn’t involve credit checks.
Why Are Some Lenders No Longer Offering P2P Loans?
Previously, the peer-to-peer lending industry was lightly regulated. As a novel idea, P2P loans were largely exempt from the regulations and consumer protection laws that applied to personal loans issued by banks and credit unions.
However, that has changed. The U.S. Securities and Exchange Commission (SEC) labeled P2P loans as securities, and therefore they have to be registered with the FEC to comply with federal securities laws.
This imposed a significant burden on lenders in terms of reporting and registration. For many, it became too difficult to implement, and many P2P lenders closed.
Of the P2P lenders that continued to operate, most have moved away from working with individual investors and instead only utilize institutional investors. That’s partially because of increased regulation, and also because it’s harder for a P2P model using individual investors to reach high loan volumes.
Are P2P Loans a Better Choice Than Payday Loans?
P2P lenders typically have lower credit requirements than traditional lenders, so you can qualify for a loan even if you have less-than-perfect credit. While P2P loans may have higher interest rates than you see advertised by some personal loan lenders, they’re still significantly less expensive than payday loans.
With consumer P2P loans, interest rates can reach 35.99% and higher. However, they’re much lower than the APRs of payday loans. According to the Consumer Financial Protection Bureau, the typical two-week payday loan has fees that equate to an APR of almost 400%.
If you have an emergency need for money, an organization called the International Association of Jewish Free Loans could be a better place to turn than payday loans. It provides 0% APR loans for a variety of purposes to those in need, but it’s only available to residents of certain states, and some branches require Jewish religious affiliation.
Are P2P Loans Safe?
For borrowers, P2P loans are quite safe. Platforms that offer P2P loans act as intermediaries between investors and borrowers.
Peer-to-peer loans aren’t insured or protected by the government. However, that puts most of the risk on investors, rather than borrowers.
Do P2P Loans Affect Your Credit Score?
Whether a peer-to-peer loan affects your credit score depends on the lender. Most P2P lenders have minimum credit score requirements and perform hard credit inquiries, and each inquiry can cause your score to drop.
One exception is crypto-backed P2P loans. These loans are secured by collateral and can be issued without credit checks, so there are no credit inquiries that can affect your credit.
With all P2P loans, your timely payments can affect your credit, too. If you fall behind on your payments and your debt is sent to collections, those actions will show up on your credit reports and cause your score to drop.
How We Chose the Best Peer-to-Peer Lenders
Our team evaluated 38 lenders and collected 1,520 data points before selecting our top choices. We weighed more than 20 criteria and gave a higher weight to those with a more significant impact on potential borrowers.
The top picks were selected based on factors like membership requirements (weighted 15%), average fixed APR (weighted 15%), and average origination fees (weighted 10%).
We also took into account the flexibility of repayment terms, helpful features like prequalification, and whether a co-signer or joint applications are permitted to ensure borrowers get the best possible experience. For further information about our selection criteria and process, our complete methodology is available.