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

If you’re looking for the best personal loan lender, you have many options to choose from. In addition to more traditional funding sources, such as banks and credit unions, peer-to-peer lending marketplaces have become a leading contender for those who are looking to borrow.

With peer-to-peer lending, funding for loans is not provided by banks. Rather, the money comes from individuals who invest funds to be lent in return for making profits through interest payments. This makes peer-to-peer lending more flexible than what can be found with traditional banks.

This trend started with the launch of Prosper in 2005, the first peer-to-peer lending marketplace in the U.S. Since then, Prosper has gotten more than 1 million loans off the ground and continues to grow, having recently gotten into home equity lines of credit (HELOCs).

This guide will help you evaluate Prosper as you research your borrowing options in the financial marketplace.

Is Prosper a good personal loan?

Prosper is the first peer-to-peer lending platform to launch in the U.S. Through its services, people with money to lend are connected with people who have the need to borrow. As borrowers make payments on their loans, those who have invested their money to fund the loan get a piece of the interest. The borrower wins by being able to get the money they need, while the investor makes a profit.

Prosper facilitates these loans and transactions, but the actual loans are made by WebBank, an FDIC-insured industrial bank that provides funding options for several loan marketplaces, such as LendingClub and Upgrade. Prosper makes money from transactions and servicing fees charged to borrowers and investors.

Prosper launched in 2005 and is based in San Francisco, but it now has an office in Phoenix, AZ. Since it launched, it has facilitated over $12 billion in loans to over 770,000 customers.

Prosper offers personal loans for various purposes, including debt consolidation, vehicle purchases, medical/dental expenses, home improvement, and more. Loans range from $2,000 to $50,000 at fixed rates and terms for borrowers. It also recently added options for HELOCs for borrowers living in Alabama, Arizona, Colorado, Florida, New Mexico, and Texas.

Which loan products does Prosper offer?

Prosper mainly offers personal loans that can be used for many different purposes, such as home improvements, debt consolidation, vehicle financing, weddings and engagement rings, new baby and adoption costs, and even small business expenses. They now allow HELOCs in Alabama, Arizona, Colorado, Florida, New Mexico, and Texas. Here is a closer look at the two specific loan options from Prosper.

Personal loans at Prosper

Like just about all personal loans, Prosper’s personal loans are unsecured, which means you don’t have to provide anything of value as collateral that could be taken should you be unable to repay the loan. Prosper offers loan amounts ranging from $2,000 to $50,000, with repayment terms from two to five years with a fixed APR (interest rate) that doesn’t change throughout the life of the loan.

Prosper calculates your loan’s APR based on several factors, one of which is the applicant’s “Prosper Rating.” This rating is generated by a proprietary system designed to evaluate the amount of risk associated with an application. You can get a preliminary rate check by filling out some basic information on the Prosper website. When you do this, Prosper will run a soft credit check on your Transunion credit report, but this won’t affect your credit score.

Prosper will also look at your credit history to see if you fulfill the basic eligibility criteria for taking out a loan, which includes having:

• A FICO score of 560 or higher
• Debt-to-income ratio of less than 50% (meaning if you make $50,000 per year ($4,167 monthly) before taxes/deductions, then you can’t owe more than $2,100 in monthly debt)
• More than $0 in annual income

You will also need to be a resident of a state where Prosper can offer loans, have a bank account, and be a U.S. citizen with a Social Security number.

If you want to move forward with any loan offers that are provided to you after the rate check, you’ll be asked for additional information, and a hard credit inquiry will be made to your credit report as part of the application process. As with any hard inquiry, this will lower your score temporarily, and the inquiry can remain on your record for up to two years.

You can expect to pay a 1% to 7.99% origination fee when you accept any personal loan from Prosper. An origination fee helps the lender cover the costs of loaning you the money. 

Prosper’s origination fee is deducted from the total amount of your loan. Annual percentage rates (APRs) on Prosper's personal loans start from 8.99% (as of March 11, 2024). Your loan rate will typically vary based on your creditworthiness, and borrowers with good credit or excellent credit will typically get lower rates. There is no prepayment penalty for paying off your loan early.

Loan amount	$2,000 to $50,000
Loan term	2-5 years
APR	As low as 8.99% (as of March 11, 2024)
Credit score needed	560 or higher

Prosper personal loans can be used for a large number of purposes, from medical bills, debt consolidation, and purchasing a vehicle to home improvements, financing major life events, and covering short-term expenses. They can’t be used to pay for private and postsecondary education.

Home equity line of credit at Prosper

If you live in Alabama, Arizona, Colorado, Florida, New Mexico, or Texas, and own a home, you may be eligible for a HELOC from Prosper. This is a secured credit line that is based on the value of the equity in your home. You can use these funds for home improvements, financing large purchases, and consolidating debt, among other reasons.

Prosper’s HELOCs have variable interest rates, meaning the interest rate will change depending on the current prime rate, which can fluctuate. Terms can last between 20 and 25 years, which are broken down into draw and repayment periods.

During a draw period, you can access money from your line of credit as needed. A draw period can be up to 10 years, and during this time, you can use up to the full amount of your credit line. For example, if you have a HELOC for $10,000 with a 10-year draw period, you could borrow $2,500 the first year to recarpet a few rooms in your home, then another $1,500 the next year to pay off a few credit cards with small balances. This is in contrast to a loan, where you get a lump sum of money once and would need to apply for a new loan if you need more later.

You will make payments during the draw period on any amount you borrowed plus the accrued interest. However, you will also have the option to only pay on the interest during this time. This won’t lower your balance but can give you the option to make smaller monthly payments if needed.

After the draw period comes the repayment period. The repayment period can be between 10 and 15 years, during which you can no longer borrow on your credit line, and you’ll be paying on both the principal and interest. Your payments will be based on how much you will have to pay monthly to repay the balance plus interest before the end of the term.

You can use the same rate check tool on the Prosper website to get an offer for a HELOC without a hard inquiry on your report. Prosper claims that their more streamlined and digital process for completing an application is much faster than what you would get with a competitor.

What Prosper customers are saying

Reviews about Prosper loans are very mixed, depending on where you look. Credit Karma has 3,759 customer comments about Prosper, adding up to a 4.3 out of 5-star rating. Comments include:

• “Fast results within hours of applying. Origination fee, but no penalty for early payoff. Deposited in account within a few business days.”
• “It was a very fast process from beginning to end! Customer service was great and will definitely use again if necessary! They absolutely made my life much easier when time in need! Will definitely recommend to anyone!”
• “Simple, quick, straightforward.”

On the other hand, customer comments on the Better Business Bureau conveys general dissatisfaction with Prosper. The Better Business Bureau has 112 reviews for Prosper, averaging around 1 stars out of 5. 

Comments focus on issues with customer service, being charged unexpected fees, misunderstandings that preapproval offers are not concrete offers, and requests for personal information that the reviewer felt was too much, such as direct access to checking accounts to see how an applicant spends and earns.

FAQs about Prosper

The final word on Prosper

Though Prosper was the first peer-to-peer lending marketplace in the U.S., there is little that differentiates it from its competitors. The process for borrowing with Prosper is pretty straightforward: check your rate, choose your loan, complete the application, and get your loan funds.

Prosper charges origination fees, which is common for most types of loans. But it also offers relatively low interest rates and doesn’t penalize you for prepayment, which are both plusses for any lender. 

Overall, Prosper is worth researching if you're wondering how to get a loan, but it should be one of several lenders to look at as you shop around for the best personal loans or HELOCs. Consider comparing lending products from both online lenders and traditional lenders to find the best option for you.