- What is Prosper?
- How does Prosper work?
- How much does Prosper cost?
- Prosper Features
- Who should use Prosper?
- Who shouldn’t use Prosper?
- Pros & cons
- Prosper vs. competitors
- The bottom line
What is Prosper?
How does Prosper work?
- 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
How much does Prosper cost?
Quick rate check
Offers loans to those with less than excellent credit
No penalty on prepayment
It is also for investors
Home Equity Lines of Credit
Who should use Prosper?
Investors looking for diversification
Those looking for consolidation loans
Those with a high credit score
Who shouldn’t use Prosper?
Those with bad credit
Those who do not want to pay high fees
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
|Platform||Interest rate||Credit score||Loan amount|
|Prosper||7.95 - 35.99%||640||$2,000 - $40,000|
|Upstart||8.05% - 35.99%||620||$1,000 - $50,000|
|SoFi||5.99 - 18.85%||680||$5,000 - $100,000|
The bottom line
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