Prosper Personal Loans Review

These peer-to-peer personal loans don't require a long credit history

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Prosper logo
overall rating
2.4

Prosper is a leader in peer-to-peer lending. The company launched in 2005 and was the first of its kind to offer loans to individuals that companies or people provide. It’s a way for people to invest in people, sometimes known as “social lending” or “crowdlending.”

Prosper offers personal loans for debt consolidation, home improvement, weddings, babies, vehicles, and even small businesses. Read on to see if a Prosper personal loan will work well for you.

  • Product Specifications
  • Pros & Cons
  • Fees
Product Specifications
  • APR Range 7.95% to 35.99%
  • Loan Amounts $2,000 to $40,000
  • Loan Terms three to five years
  • Recommended Minimum Credit Score 640
Pros & Cons
Pros
  • Joint Applications

  • Minimal Credit History

  • Fast Turnaround

Cons
  • Many Fees

  • Liimited Repayment Terms

Fees
  • Origination Fee: 2.41% to 5%
  • Prepayment penalty: None
  • Late Fee: $15 or 5%, whichever is greater
  • Insufficient Funds Fee: $15

Pros Explained

  • Joint Applications – If you don’t qualify for a Prosper loan on your own, you can ask a trustworthy friend or relative to co-sign the loan with you through a joint application. This could be the difference between getting approved or denied.
  • Minimal Credit History You can get a Prosper personal loan with a relatively sparse credit history. You’ll need a debt-to-income ratio that’s less than 50%, no bankruptcies within the last year, and fewer than five credit inquiries in the last six months. You’ll also need to prove you have at least some income.
  • Fast Turnaround The prequalification process means you can see if you qualify in a few minutes with only a soft inquiry on your credit, which won’t affect your credit score. If you do qualify, you can complete your application soon after. You can receive your funds within as few as three days.

Cons Explained

  • Many Fees The origination fee is anywhere from 2.41% to 5%. There’s also a late fee ($15 or 5% of the unpaid amount, whichever is greater) and an insufficient funds fee ($15). Those could add up if you fall behind on payments or don’t have enough money in your account to pay back your loan.
  • Limited Repayment Terms There are only two terms to choose from: three years and five years. You might need more time than what’s offered.

Time to Receive Funds

After you apply and have been approved for a Prosper loan, you’ll set up banking details. You can expect funds within a few days.

Prosper Personal Loan Features

  • Prequalification option
  • Joint application
  • Adjustable monthly due date
  • No prepayment penalty
  • Multiple usages (including home improvements, debt consolidation, a medical emergency, or anything else you need)

Apply for a Prosper Personal Loan

Once you check your rate and see if you prequalify for a Prosper loan, you’ll be able to complete an application. To qualify, you’ll need:

  • To prove you have at least some income (Prosper requires a number greater than $0)
  • No bankruptcies within the last year
  • Fewer than five credit inquiries in the last six months (think credit card applications, auto loans, mortgages, and more)
  • A debt-to-income ratio less than 50%
  • At least three open accounts on your credit report

Once you’ve applied, Prosper might contact you for more information about your employer, income, and credit history, if needed. The extra screening process could take a few days to complete before you’re approved for a loan. 

Your application goes through to investors who are looking for people to invest in. As Prosper is not a bank—it’s a company or an individual investing in you—there could be a delay in approval. While the application process might give you some preliminary figures, such as an estimated interest rate and repayment terms, lenders have to fund your loan. There’s a chance you could be approved for a Prosper loan, but if lenders don’t agree to the terms, you might not get your loan.

Can I Refinance a Personal Loan With Prosper?

Prosper currently doesn’t offer personal loan refinancing.

Verdict

As a peer-to-peer lending platform, you can use Prosper to take out a personal loan that’s funded by investors. You need a good credit score to qualify, but you don’t need a long credit history. This is helpful for borrowers who are new to credit and don’t have much to their name. The ability to change your due date to a day that works best for your budget is also helpful to ensure that you never miss a payment.

Nevertheless, Prosper might not be the best option. The various fees could be a turnoff. There are other personal loan lenders who don’t charge any fees, so Prosper’s origination, late, and insufficient funds fees can inflate your loan amount. You might save more money by using a lender that doesn’t charge the extra fees. 

Because it’s a peer-to-peer lending platform, your loan funds could take longer to come through. If you need your money right away, there are other lenders who approve and deposit funds within a day or a couple of days. Compare lenders to make sure a Prosper loan is right for you before completing your application.

Methodology

Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of personal loan lenders. We collected over 25 data points across more than 50 lenders—including interest rates, fees, loan amounts, and repayment terms—to ensure that our content helps users make the right borrowing decision for their needs.

Article Sources

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