Prosper is proud to be America's first peer-to-peer lending marketplace. They are also a subsidiary of Prosper Marketplace Inc. and have over two million members with over $5 billion dollars in loans funded.
They offer unsecured personal loans, this means you don't have to put up collateral at the time of application. What makes them unique is they use peer-to-peer lending, where individuals and private companies can fund your loan. Due to this, you might be able to receive a better rate and borrow more than you would with traditional lenders.
Prosper allows you to use your loan funds for many reasons. This can include consolidating debt, making home improvements, financing a newer vehicle or using the money for business purposes. With competitive rates and an easy application process, it makes Prosper a great option to consider.
Prosper Loan Basics
With Prosper, your loan will be dependent upon a variety of factors including your credit score. To qualify for a loan, you will need a strong FICO credit score. This means if you don't have a high enough score, it is best to work on improving it to make you a better candidate in the future.
The rates and repayment terms for a Prosper loan depends on the rating they assign you. Prosper assigns ratings from AA to HR. AA is for members with the highest credit scores, as they will qualify for the best APR rates. Whereas first-time borrowers will be on the opposite end of the spectrum and may only qualify for a loan with much higher APR's. Even at the highest rate, Prosper is better than other lenders like NetCredit, who charge up to 150% APR for their loans.
Your credit rating, amount borrowed, and purpose for the loan will also determine how long you have to repay it. The maximum repayment term is 60 months, but some loans - especially those with higher interest rates – will have a lower repayment term. Although this will increase your monthly payment, you will have a lower total loan cost, since your repayment term is shorter.
Application Process for Prosper
To see if you qualify, you'll need to visit Prosper's website and fill out the short application form. It should take only a few minutes to supply the information needed. Once you submit the application, you find out instantly if you qualify for a loan. If you do, you move on to your loan listing. This is like a classified ad in that you are telling prospective investors why you need a loan. After you complete the loan listing, you wait until investors fully fund your loan. When they do, you receive the loan funds via direct deposit into your bank account.
Prosper makes repaying the loan simple. You can have your monthly payments deducted from the same bank account you used for funding.
Fees Associated with Using Prosper
Prosper does assess a closing fee at the time of the funding. What this means is they will deduct a percentage of your loan's balance to pay for the fee and then deposit the rest to you. The percentage deducted depends on several factors including your Prosper rating and the repayment term of the loan. To illustrate, if you have an A rating and have a repayment term of five years, your closing fee would be four percent. If you borrow $5,000, your fee would be $200, which Prosper would deduct before depositing the remaining balance of $4800 into your account. While this might seem expensive on the surface, the lower interest rates they offer will offset this initial cost over the life of the loan.
Prosper is similar to other lenders in that they will have requirements you need to meet to receive funding; these include the following rules:
- One, you must live in a state Prosper serves. Currently, residents of Iowa, Maine, and North Dakota will not qualify for a loan.
- You must also have a minimum credit score of 640.
- You need to have a valid bank account and a social security number to qualify.
- Lastly, you will need to supply documents that support the information provided in your application. Often times this will include a copy of your pay stub, bank statement and a picture of a valid government-issued ID such as your driver's license. Keep in mind that as you supply these items, your verification stage increases, giving investors more incentive to invest in your loan.
Benefits of Using Prosper
Since Prosper has such competitive interest rates, often times you will discover them to be a better alternative to traditional lenders. This makes Prosper a great place to turn to if you have debt with high-interest rates and want to pay if off quicker. Along with great rates, their easy application process and great customer service make Prosper a smart lending choice.
Customer Service with Prosper
Prosper takes pride in providing exceptional customer service. They earned an A+ rating with the Better Business Bureau in part due to the service they give their customers. Additionally, Prosper offers phone and email options to contact them. They have flexible hours Monday through Saturday where you can reach them to have any questions addressed.
Prosper's Learning Resources
Prosper doesn't have a personal finance blog, but they do an excellent job on their website explaining how their loans can benefit you. Their article on debt consolidation shows how a low rate loan with Prosper can help you pay off your high-interest credit cards quicker and save money. It's practical advice like this that makes them a good resource to use to see if their products are right for you.
Things to Consider
Although Prosper has stricter credit criteria than other online lenders, their interest rates are competitive, making them a great option to consider. Since you can use the loans for a wide variety of purposes, they can be an inexpensive alternative to using traditional means to obtain financing.
Prosper Loan Review Recap
Prosper's peer-to-peer process is great for borrowers who qualify and offers great rates and fewer fees than a normal bank loan.