Prosper Review: A Peer-to-Peer Lender That Meets All Your Needs

A peer-to-peer lending platform, Prosper offers competitive rates on personal loans with long and flexible terms. Prosper has specific eligibility criteria that borrowers need to meet. These loans are funded by investors and the loan rates do not affect your credit score.

What is Prosper?

There is increasing awareness and demand for peer-to-peer lending and Prosper is a leader in the industry. Launched in 2005, the peer lender offers loans in the form of crowdlending or social lending. The loans are available for home improvement, vehicle purchase, debt consolidation, weddings, children, and small businesses.
You can borrow without any collateral and you can get a loan even if you have bad credit. As per the company, it has issued $16 billion in loans to more than one million customers. It is a reputable lender that helps connect the investors and borrowers for loans. It is possible to borrow anything ranging from $2,000 to $40,000 with a term ranging from three years to five years. The biggest advantage of the loan is that it can be used for any purpose outside of the education-related expenditure and checking the rates will not affect the credit history.

How does Prosper work?

Prosper has a simple and straightforward application process. It is easy and quick. You simply need to fill the online form to get the rate.
The company uses TransUnion to get your credit score and the minimum eligibility criteria required is as follows:
  • An income higher than $0
  • A debt to income ratio between 50%
  • Less than five credit inquiries in the last 6 months
  • No bankruptcies in the last year
  • Minimum of three open credit lines on your credit report
If you would like to make a loan application, here is the process you need to follow. You need to begin by entering the desired loan amount to Check the rate.
You will then have to provide details on how you intend to use the money. You get to choose from medical or dental, debt consolidation, home improvement, big purchase, motor expense, household expenses, business, taxes, special occasion, or others. You must remember that the loan cannot be used for post-secondary education expenses like fees, tuition, vocational school, books, or for a room at the college or university.
You can choose between getting the loan yourself or adding a cosigner. When you add a cosigner, you can enjoy a low-interest rate based on their credit score. But they are also obligated to repay the loan as you do. After providing the borrowing information, you need to add personal information like your full name, date of birth, and email address. You will now have to add details about your income. This information will help Prosper decide whether you will be able to repay the loan. You will be asked to provide the annual income, monthly rent, or mortgage payment and at last, you will have to enter the phone number and choose a password. You will now get your rate.
After you make the loan request, you will be given a letter grade that ranges from AA, A to E, or HR which means high risk. The lower your grade, the higher the risk and rate of interest on the loan. If you have a better rating, you will enjoy low origination fees. In rare cases, Prosper could call your employer or the bank to verify the information. This screening process can take about three to five days. Borrowers need to remember that if you have been late on current or previous Prosper loans, you might not get approved for a new loan.

How much does Prosper cost?

Just like any other loan, you will have to pay interest when you pay down the balance. You can get a rating based on your credit. The interest rates for the loan range from 6.95% APR to 35.99% APR.
Besides the interest rate, there is an origination fee ranging between 2.41% to 5%, depending on the loan amount and credit score. This fee will be deducted from the loan proceeds.
If you fail to make the monthly payments, there is a $15 fee. There will be a late fee applicable for a delay of 15 days or more. There is also a $15 fee for each payment that is unsuccessful due to insufficient funds.
Lastly, Prosper charges a check processing fee of 5% of the payment or $5, whichever is less. It is charged whenever you send the payment by check. If you use ACH transfer, it is free. There are no prepayment charges so you can pay off the loan without any penalty.

Prosper Features

Quick rate check

Prosper offers an instant rate check. You do not need to visit multiple websites to know the rate, it will take less than five minutes to offer an interest rate. Additionally, checking the rate will not have any impact on the credit score. They only use a soft credit inquiry that is visible to you but not to any other lenders.

No collateral

Prosper offers unsecured personal loans. The loans need no collateral and even if you stop paying, the lender will not seize any asset of yours. The damage will come in the form of a low credit score and fees.

Offers loans to those with less than excellent credit

Borrowers with top credit scores can easily get the best rates but you do not need perfect credit to get a loan from Prosper. The loan is available to those with credit scores as low as 640. It is important to ensure that your credit report is free of bankruptcies in the last year and it should have less than five inquiries in the past six months. Additionally, it should contain at least three prior credit lines.

No penalty on prepayment

Borrowers can pay off the loan without any additional fees. By paying the balance a few days or weeks before the due date will help save on the interest amount on the loan.

Fixed-rate loans

The loan terms carry a fixed interest rate for life. The three-year loan has a lower interest rate as compared to the five-year loan.

It is also for investors

Prosper does not limit itself to borrowers. If you have the money to invest, you can choose your loans and Prosper will build a portfolio for you in no time.

Home Equity Lines of Credit

Prosper offers home equity lines of credit that are secured by your home. This means the loan is secured and the lender can go after your home in case you fail to pay. It works like a credit card attached to your home.

Who should use Prosper?

Investors looking for diversification

Those who want to diversify outside of the bond and stock markets can consider Prosper. Peer-to-peer loans are a good form of alternative investment.

Those looking for consolidation loans

Those with a high credit card balance or with one or more cards may be able to consolidate the debt with a low rate of interest. If the rate is below what you pay on your cards, you will be able to save a significant amount of money.

Those with a high credit score

If you enjoy a good or excellent credit score, you will qualify for the best rates at Prosper.

Who shouldn’t use Prosper?

Those with bad credit

If you have poor credit and a history of missed payments or bankruptcy, you might not qualify for a Prosper loan. Even if you qualify, the rates could be higher than what you would pay with a credit card.

Those who do not want to pay high fees

The origination fee is an important part of Prosper and many lenders in the industry do not charge any fees at the beginning of the loan. Prosper has a high fee and it could be a reason to look elsewhere if you are not willing to pay it.

Pros & cons

  • Quick and convenient lending procedure: Prosper’s loans are funded by individuals and corporate investors. These investors have their risk standard and even borrowers with a low credit score could be approved here. On the other hand, banks have strict lending criteria and all borrowers may not get quick approval.
  • Cosigners allowed: A huge benefit of Prosper loan is that it allows you to make a joint application to enjoy better repayment terms. If the cosigner has a FICO score of at least 640 and meets other qualifications, you will enjoy favorable terms. You only need a minimum credit score of 600 or above if you have a cosigner. Many other lenders in the industry do not allow cosigners.
  • Take out two loans at a time: Borrowers can take out a second loan from Prosper after the first loan and after a period of 6 months, with regular payments. However, the loan amount you want to borrow should not exceed $40,000 and you may get special discounts too.
  • Peer-to-peer can eliminate banks: The platform connects investors and borrowers and it is not a bank that is looking to profit. Hence, it eliminates the banks. Some loans are available at a better rate than one would get from the bank.
  • Borrow a high amount: You can apply for a loan for any amount ranging from $2,000 to $40,000. Such loans can help handle debt consolidation with ease.
  • High APR: Prosper has a maximum APR of 35.99% which is the same for borrowers with low or bad credit. And it is the same with other bad credit lenders.
  • A high credit score does not mean a low rate: There is no guarantee that you will enjoy lower rates if you have a good credit score. There are applicants with a Prosper Rating of A who have an APR of 13% for a 3-year loan.
  • Fees: There is an origination fee ranging from 2.41% to 5% on every loan. This fee will depend on the rates you are offered. If you apply for a loan of $10,000, you will pay a minimum of $240 as an origination fee. There are lenders in the industry who do not charge any fees.

Prosper vs. competitors

PlatformInterest rateCredit scoreLoan amount
Prosper7.95 - 35.99%640$2,000 - $40,000
Upstart8.05% - 35.99%620$1,000 - $50,000
SoFi5.99 - 18.85%680$5,000 - $100,000


The major difference between Upstart and Prosper lies in the loan amount. Upstart offers a slightly higher loan amount and has a low minimum credit score requirement. You will be offered a 3- to a 5-year loan with no prepayment penalty but a high APR. If you want a low APR, go with Prosper.


SoFi is a personal finance company that also offers student loan refinancing. It offers a significantly high loan amount but also has a high credit requirement to meet. If you have a score of 680 or above, you can apply for a loan as high as $100,000. It also offers a student loan and student loan refinance that Prosper doesn’t.


Is Prosper a trustworthy lender?
Prosper enjoys an A+ rating and has been in the business since 2005. It is a reliable and trustworthy place to borrow. If you have excellent credit, Prosper offers great terms.
Is there a minimum credit score requirement for a loan?
Prosper requires the borrowers to have a minimum credit score of 640. But it does not guarantee the best rate. Hence, if you have a credit score above 790, you will get a Prosper Rating of AA and enjoy the best interest rate with low fees.
What are the loans offered for?
Prosper loan options are: Debt Consolidation Loans; Small Business Loans; Short Term & Bridge Loans; Home Improvement Loans; Auto & Vehicle Loans; Engagement Ring Financing; Baby & Adoption Loans; Special Occasion Loans; and Military Loans; Green Loans.
How can I qualify for the loan?
Prosper will consider your credit score, annual income, and debt to income ratio to decide whether you can repay the loan or not. It will also take into account the FICO score. If you meet their minimum criteria, you can apply for a loan. You need to have three open forms of credit on the credit report with less than five inquiries in the last five months.

The bottom line

With a personal loan, you can meet your personal expenses and also manage to save money while you pay off other debt. Prosper loans are useful for many purposes but you must be aware of the fees and interest you need to pay on the same. Prosper is a great place to find a loan that meets your specific requirement. It is ideal for those with good credit as you can enjoy low rates. Since there is no cost to apply, you can check your rates without it reaching the credit bureau. If you pre-qualify, you will enjoy favorable loan terms.

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