By Kevin Mercadante
Loan types - Personal Loans
Loan amount - $2,000 to $35,000
Repayment Terms - 3 or 5 years
Top Pro - Great range of interest rates available
Top Con - Origination fees can be relatively high
Best for - Customers with good credit looking for excellent rates on consolidation loans
Founded in California in 2006, Prosper holds the title of the first peer-to-peer lending marketplace in America. The company offers both borrowing services and investment opportunities for customers looking to finance loans for others while bolstering their own lending portfolio. The company handles the servicing of the loan, as well as the matchmaking, helping to simplify the process of accessing financing. Prosper offers borrowers personal loans for a variety of purposes, from home use to consolidation or even engagement ring purchases. To date, Prosper has handled over 2 million customers and funded over $9 billion in loans. The company offers a quick online solution for users seeking personal loans, helping customers of all backgrounds finance their needs, wants, and future plans.
One of the best aspects of Prosper is the company’s ability to quickly and efficiently match users to the financing they need. With their application and loan posting system, Prosper can match borrowers to the investors that are most likely to fund their loans, helping them locate financing much quicker. Although the company will receive applications from all potential borrowers, they prefer to work with borrowers with credit scores starting at 640 and higher. The company’s loans are ideal for customers with good to excellent credit who are seeking a no-frills, versatile personal loan without the hassle of institutional lenders and bureaucracies. Due to great loan amounts and a wide range of interest rates available, customers with good to excellent credit looking for fast financing can uncover a solution for their needs thanks to Prosper.
Overall, we were happy with Prosper’s service offerings. The company’s peer-to-peer model helps customers cut out middlemen that can many times create more complications than benefits. Among the best benefits is their substantial assistance when it comes to making the lending process much swifter. Prosper loans can be originated and deposited into customers’ accounts as quickly as one business day following approval, although the company notes that funding can take one to three business days for funds to be available in borrower accounts.
We were also appreciative of the company’s transparent fee structure, which does not include prepayment or transfer fees. However, customers who fall behind on loan repayment will be responsible for late payment and other penalty charges. In another welcome form of transparency, Prosper also offers customers a mobile application that lets borrowers track their repayment progress and the status of their loans in addition to their spending. Prosper focuses exclusively on fixed-rate loans, guaranteeing that customers will not see their interest rates and payments fluctuate over time, making it easy for borrowers to plan out their repayment schedule and ensure they are always prepared on time.
Highlights from our Prosper review:
• Quick funding in as little as 1 to 3 days
• Excellent range of loan amounts available
• Avoid red tape and bureaucracy with direct peer-to-peer lending
• Transparent fee structure makes repayment easier
• Prosper Daily application offers money management and repayment tracking
• No prepayment penalties
• Competitive interest rates
• Marketplace model offers possibility for more competitive interest rates for borrowers
Thanks to its marketplace lending model, Prosper’s application process is more unique than many of its competitors. To get started, customers are required to fill out a basic questionnaire that collects personal details, as well as financial and credit information required to prequalify borrowers for their applicable interest rates. Customers applying for a Prosper personal loan should meet the following criteria:
• A minimum FICO credit score of 640
• A debt-to-income ratio less than 50.00%
• Must have positive income (greater than $0)
• No active bankruptcies filed within the last year
• No more than 7 individual credit bureau inquiries in the previous six months
• At least three open trades reported on credit reports
Though Prosper’s requirement for a minimum borrower credit score contrasts with many competitors, it enables the platform’s investors to offer more affordable interest rates considering the applicable borrowers are lower-risk.
Once the initial application is completed and approved, customers can create a loan listing on Prosper’s investor marketplace, where different investors can choose to bid on and fund loans that fit their portfolio’s risk tolerance. If approved, the loan amount is cleared and the loan is serviced. From then on, borrowers will interact directly with Prosper and not investors. The company does charge a small origination fee on loans that ranges from 1.00% to 5.00% depending on the borrower’s qualifications.
We were pleased with the company’s straightforward application and loan matching model, which empowers customers to find the right financing solution at the most competitive interest rates and conditions available.
One of our favorite aspects of Prosper’s personal loan service is the company’s versatility when it comes to financing options.
The company offers repayment terms of three or five years for all their loans. This is less flexible than some competitors, but an excellent range of loan amounts and competitive interest rates make it a flexible tool for borrowers with good credit looking for extra financing. Prosper’s loans can be used for a variety of purposes including medical expenses, debt consolidation, purchasing a new vehicle or repairing an existing one, home renovations, and more.
Customers can choose from loan amounts ranging between $2,000 and $35,000, a choice with more breadth than many other lending marketplaces and loan originators. In addition, customers can qualify for APRs as low as 5.99% depending on the popularity of their loan posting.
During our review, one of the areas that stood out the most was Prosper’s mechanism for rating potential loans and offering competitive terms for customers. Once borrowers have prequalified for their interest rates, they are given the opportunity to create customized loan postings and load them onto Prosper’s online marketplace. After a posting is uploaded, loans are funded by investors who can bid on part of the whole amount, offering financing for those loans that fit their risk profile and portfolio preferences.
Unlike many other lenders, Prosper cuts out the middleman for funding, allowing the full financing to come from investors through their website while still acting as the loan servicer. This ensures a more competitive model, which can lead to better terms for customers and a higher likelihood of being funded regardless of borrowing qualifications.
Overall, we found that Prosper’s repayment terms are flexible, although they could add some more alternatives to offer a broader service. The company offers personal loans that come with one of two repayment terms: three or five years.
This is more limited than some competitors, but Prosper compensates with an excellent range of APRs to accompany their flexible loan amounts. Customers can receive approval for personal loan APRs that range from 5.99% to 35.99%. This gives customers the flexibility to find a loan that works for their finances and fits into a realistic payment plan. While more loan term duration alternatives could broaden the appeal of Prosper’s services to an even wider audience, we were nonetheless comfortable with the company’s repayment terms.
As a lending marketplace, Prosper is aware of the importance of protecting its customers’ privacy and information. The company utilizes industry-standard technologies to protect data transmission and storage, including Extended Validation and Secure Socket Layer encryption methods to ensure that any information shared is encrypted and transmitted securely.
Moreover, the company uses a variety of physical and electronic safety measures to make certain that their data centers are fully protected. The company collects information from customers, but we were happy to see that Prosper remains very transparent about why and how they collect it, as well as who they share it with and how customers can opt out of data sharing.
Customers looking to reach Prosper can contact the company via email or via their toll-free call center. Prosper’s phone support is available Mondays through Fridays between 8:00 AM and 9:00 PM Eastern Standard Time or 5:00 AM to 6:00 PM Pacific Time; they are also available Saturdays between 9:00 AM and 5:30 PM Eastern Time, or 6:00 AM to 2:30 PM Pacific Time. In our experience, phone support was easy to reach and our waiting time was minimal.
Representatives could answer our questions thoughtfully and service was both courteous and efficient. Our email inquiries were responded to within a short period and included well-written and insightful answers that helped resolve our issues. Apart from service representatives, the company hosts an informative education and resource center that covers many frequent questions arising from potential borrowers.
• Prosper’s service offerings are top of the line, but we did find some areas the company could improve its services to stand out even more:
• The company could add to the number of available repayment terms
• Loans are only geared toward customers that have stronger creditworthiness
• Origination fees can be high depending on prequalification
However, there were several highlights that overcame these minor drawbacks that we uncovered during our review:
• The company’s marketplace model creates more competition, encouraging more affordable rates
• Support and service were both outstanding
• The company’s interest rates and loan amounts are highly competitive
• Prosper offers a straightforward application for prequalification
Prosper offers customers a simpler way to find the financing they need. The company does away with middlemen, creating a true lending marketplace that allows borrowers to match with investors that are comfortable with their risk profile. Moreover, thanks to a simple application and transparent funding process, the company makes it easy for customers to find the financing they need regardless of urgency. Finally, competitive interest rates and loan amounts make the company an appeal option for those customers that have good to excellent credit and are looking to finance major or unforeseen expenses without indebting themselves over the long haul.
Prosper Funding LLC
221 Main Street, Suite 300
San Francisco, CA