Prosper Personal Loan Review [2024]: The Original Peer-to-Peer Lender

Prosper personal loans at a glance

Prosper pioneered peer-to-peer lending in the U.S. in 2005 and has facilitated over $27 billion in loans to more than 1.7 million customers. Its investor-driven model may offer more flexible requirements for borrowers than traditional lending institutions. Instead of going through a bank that may decide not to loan to you if your credit profile indicates too much risk, potential investors decide whether or not to invest in your loan when you apply with Prosper. If approved, they make a return on their investment when you repay your loan.

WebBank, an FDIC-insured industrial bank, provides funding for loans with Prosper and other marketplaces such as LendingClub and Upgrade.

Who is Prosper best for?

If you don’t have the greatest of credit, Prosper could be a smart option. While some lenders require good credit (FICO score of at least 670) or better, Prosper says it “welcomes those with less-than-perfect credit” and looks at other factors besides your credit score. A FICO score of at least 600 gives you the best chance of approval, so Prosper might be right for you if your score is at or above this but you’ve had a hard time getting a loan.

You also might be a strong candidate for a Prosper personal loan if you qualify for a low origination fee and rate. This depends largely on your credit profile, and Prosper will let you check for prequalification to see what rates and fees you might be approved for (note that prequalification doesn’t guarantee approval). Though Prosper is ideal for borrowers who don’t have excellent credit, its maximum APRs and origination fees are high, so we don’t necessarily recommend it for those who get the shortest end of the stick and qualify for the worst of these.

Which loan products does Prosper offer?

Prosper offers personal loans for various purposes, including debt consolidation, vehicle purchases, medical/dental expenses, home improvement, and more.

Personal loans

Prosper’s personal loans are unsecured, which means you don’t have to provide anything of value as collateral when applying. Prosper offers loan amounts ranging from $2,000 to $50,000, with repayment terms from two to five years with a fixed APR as low as 8.99% (as of 07/01/24).

Prosper uses a proprietary system to calculate your “Prosper Rating.” This evaluates the amount of risk associated with an application to help potential investors decide whether or not to fund your loan, and it may allow for more leniency than traditional lenders that solely look at income, debt-to-income ratio (DTI), and credit scores.

You can get a potential loan offer by filling out some basic information on the Prosper website, a process known as prequalification. When you do this, Prosper will run a soft credit check on your TransUnion credit report, which won’t affect your credit score.

How to qualify

When you formally apply, Prosper will examine your credit profile and financial information to see if you’re eligible for a loan. You might qualify if you meet the following criteria:

• You have a FICO score of 600 or higher (though some applicants with lower scores may be accepted).
• You live in a state where Prosper operates.

Prosper does not disclose strict minimum income requirements.

Unlike when you check for prequalification, Prosper will conduct a hard credit pull when you submit an application. This can temporarily lower your credit score by a few points and remain on your report for up to two years.

Fees

• Origination fee: 1% to 9.99% of the loan amount, taken from the loan proceeds
• APR: From 8.99% (as of 07/01/24)
• Late fee: The greater of $15 or 5% of the unpaid amount if not paid within 15 days of the due date
• Insufficient funds fee: $15 if you make a payment and there’s not enough in your bank account to cover the full amount (does not replace late fees)
• Check payment fee: The lesser of 5% or $5 if paying by check
• Prepayment penalty fee: None (most lenders do not charge these for personal loans)

Like most lenders, Prosper deducts origination fees from loan proceeds, so be sure to factor this into the amount you borrow.

Home equity lines of credit (HELOCs)

While they aren't available in all states, you may be eligible for a home equity line of credit, or HELOC, from Prosper. This is a secured credit line that is based on the value of the equity in your home. Unlike a personal loan that pays you a lump sum, a HELOC offers access to funds up to a maximum draw amount for a period of time, such as 10 years. HELOCs are best for long-term projects rather than a one-time expense.

• APR: 7.90% to 21%, or the maximum allowed by law
• Borrowing limits: Up to 80% to 90% of the home value of your primary home, up to 80% of the value of a secondary home
• Fees: No annual fee the first year, then $50 per year during the remaining Draw Period

What Prosper customers are saying

Reviews about Prosper loans are very mixed, depending on where you look. The company’s average rating is 4.6 out of 5 stars on Trustpilot, based on over 13,000 reviews. This is very high for a lender or financial institution in general.

Positive comments on Trustpilot center around reliability and the fast and uncomplicated borrowing process. Here’s a telling review that sums it up well:

However, some negative commenters felt misled by the company or were frustrated that they received marketing materials but weren’t approved for loans when they applied. The platform has a dismal 1-star customer rating with the Better Business Bureau, but many reviewers talk about credit cards rather than personal loans, and many who do speak about loans didn’t make it past applying.

Alternatives to Prosper

SoFi

If you’re looking for a personal loan with no fees, SoFi may be the right lender for you. It offers similar perks to a Prosper personal loan, such as a quick online application and potentially low rates, but with additional benefits like an autopay and direct pay discount, no late fees, and higher borrowing limits.

• APR: 8.99%-29.99% (as of 09/05/24), with autopay and direct deposit discounts
• Minimum credit score: 680 (recommended)
• Loan amounts: $5,000 to $100,000
• Loan terms: 2 to 7 years
• Origination fee: Not required, but you may negotiate a lower rate if you opt to pay an origination fee

Although SoFi wins out over Prosper in terms of fees and rates, SoFi has much stricter credit score requirements — you may need a 680 or above to qualify. Plus, if you need a smaller loan amount, Prosper is a better option as its loans start at $2,000, while SoFi’s start at $5,000.

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Upgrade

Another alternative to Prosper is Upgrade. You can borrow a smaller amount (loans start at $1,000) at comparable interest rates, but you’ll pay a higher origination fee on the lowest end.

• APR: 9.99%-35.99% (as of 8/19/24)
• Minimum credit score: 580
• Loan amounts: $1,000 to $50,000
• Loan terms: 2 to 7 years
• Origination fee: 1.85% to 9.99%

Upgrade offers similar loan terms to Prosper’s and is known for accepting borrowers with fair or even poor credit. I’d recommend this lender over Prosper for those with weaker credit profiles. Upgrade is also unique for offering secured personal loans that let you use a car as collateral.

Both Upgrade and Prosper allow joint applications, so if you add a reliable co-borrower with a stronger credit profile, your approval odds for a loan or more favorable loan terms can increase.

Upgrade

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FAQs

Bottom line

Though Prosper was the first peer-to-peer lending marketplace in the U.S., it has little to differentiate it from its competitors. Borrowing with Prosper is pretty straightforward, and you’re not likely to really notice that you’re borrowing from a peer-to-peer marketplace versus a traditional lender when applying.

Prosper charges origination fees, which is common for personal loans, though finding loans without them is possible. However, Prosper also offers relatively low interest rates and a decent range of loan amounts and terms. Still, it’s worth checking to see if you prequalify with a few lenders before choosing one to know where you might get the best rates and terms.

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Lending by peers instead of a banking institution

Available in most states

Lower minimum APRs than many lenders

Joint applications accepted