Prosper Review: Peer-to-Peer Personal Loans
Joy Wallet is advertiser-supported: we may earn compensation from the products and offers mentioned in this article. However, any expressed opinions are our own and aren't influenced by compensation. To read our full disclosure, click here.
Prosper loans are useful for many purposes but you must be aware of the fees and interest you need to pay on the same.
8.5/10
Cost
8.5/10
Features
9/10
Ease of use
9/10
Services
8.5/10
Consumer lending makes up a vast chunk of the peer-to-peer (P2P) lending market, estimated at $88 billion in 2022, according to Precedence Research, and it is projected to top $919 billion by 2032. In North America, the U.S. is home to some of the biggest P2P lenders. Among them is Prosper.
This peer lending company makes it easier than working with banks and financial institutions to receive loans, whether it is for debt consolidation, home improvements or to pay off credit card debt. If you’re interested in an unsecured personal loan, read this review to determine if a Prosper loan is right for you.
Jump To
What is Prosper?
Founded in 2005, Prosper Marketplace is a P2P lending platform based in San Francisco that caters to individuals with fair or good credit; if your credit score is below 600, you may be unable to get a loan through the company. It's important to note that Prosper is not a lender; it simply handles all loan servicing on behalf of borrowers and investors. The company also has the distinction of being America's first P2P lending marketplace. Thus far, Prosper has facilitated loans topping $22 billion to over 1.4 million people.
Here's a rundown of the products the company offers:
- Personal loans: This is Prosper's crown jewel! The company can help facilitate loans of $2,000 to $50,000, with the funds appearing in your account as soon as one business day. Rates can be as low as 6.99%. The loan term ranges between two years and five years. There are no pre-payment penalties, which means if you'd like to pay off the loan early, you can do so without worrying about extra charges. WeBank, an FDIC-insured financial institution, originates loans.
- Credit cards: Prosper's credit card targets people looking to build credit. If you've enabled autopay, the company will waive the $39 annual fee for the first year. The card also doesn't require a security deposit, comes with zero fraud liability, and you won't be charged fees for ATM cash withdrawals. You can get an initial line of credit of $500 to $3,000.
- Home equity loans: Home equity loans come in two types – a loan gives you access to a lump sum, while a home equity line of credit (HELOC) allows you to draw money as you need. Prosper offers both! Its home equity loan comes with a fixed rate as low as 8.60% APR, and you can access up to $249,000 against your home. A HELOC lets you withdraw up to $500,000 at fixed rates as low as 8.50%
- Investment and IRAs: This product lets you invest in personal loans the company helps facilitate. As an investor, you can invest as little as $25 and earn interest on the money you've loaned. The company boasts an average historical return of 5.7%. The company's auto-invest feature reinvests interest earned in new loans.
Prosper is backed by investment heavyweights Sequoia Capital, Francisco Partners, Institutional Venture Partners, and Credit Suisse NEXT Fund.
Use Quicken Loans to Get a Personal Loan
- If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
- TrustPilot Rating 4.6 out of 5
- Connect with lenders for $0
- 100% online experience.
How does Prosper work?
Thanks to Prosper's technology-first approach, the application process is a breeze, and everything is done online.
To begin, simply click on "Get Started," which is impossible to miss on the website. Depending on whether you choose a personal loan or a credit card, the sign-up process may differ slightly, but it will largely be the same. I chose personal loans, which opened up another webpage where I could move the slider to choose the loan amount I wanted and what purpose it would serve me.
Once you've given this information, you can choose to apply on your own or with someone else. Having another person increases the chance of securing a loan, but both parties will be equally responsible. After that, it's on to your personal information like your name, email address, and physical address.
Next, I was asked about my source of income - if I receive a W2 from my employer or whether I'm self-employed or receive retirement income. The last question I was asked was about my Social Security number. Prosper requires this information to check your creditworthiness; the company only takes on individuals with a fair or good credit score.
How much does Prosper cost?
Prosper charges several fees for each type of its products, some of which you'll find easily on its website, but you'll have to go through the process to find the fee you'll be on the hook for. Here are a few fees the company has talked about on its website.
- Personal loans: The company charges an origination fee of 1% to 7.99%, a check payment fee of the lesser of 5% of your payment or $5, a late fee of the greater of $15 or 5% of the unpaid monthly payment amount, and an insufficient funds fee of $15 for each returned or failed payment.
- Credit card: The Mastercard-branded card has an annual fee of $39, but it will be waived for the first year if you've enabled auto pay. Prosper also charges a late payment fee of up to $29 for the first time, and if you are late again, you will be charged $40. There's also a foreign transaction fee of 1% of the transaction amount. APR for purchases ranges between 24.24% and 35.24%, while that for a cash advance is 35.24%.
- Investment and IRAs: Investors pay a loan servicing fee of 1% each year of the payment received from borrowers. If Prosper engages a collection agency to collect on an overdue debt, investors may have to pay up to 40% of the recovered amount.
Use Quicken Loans to Get a Personal Loan
- If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
- TrustPilot Rating 4.6 out of 5
- Connect with lenders for $0
- 100% online experience.
Prosper features
Quick rate check
Prosper allows you to check your rates in as little as five minutes. You only have to tell the company a little about yourself and how you make money, and the company will inform you of the rate you'll be charged. If you'd like to go ahead with the product you're looking to get, you can do so after you've been quoted a rate.
Soft credit pull
Applying for credit cards or home equity loans typically results in a hard credit check, temporarily taking a toll on your credit. Prosper, however, does a soft credit check designed to keep your credit score unchanged. This means you can check your rates without worrying about seeing a dip in your score, even if you don't plan to sign up for the product.
Stringent checks
Prosper only caters to individuals with a FICO Score of more than 640. Beyond reviewing your credit report, it requires that you submit income and bank statements as it conducts a full credit history review. The company has over 300 data points that are meant to prevent instances of fraud. This ensures you, as an investor, will likely get your money back along with some decent interest, but as a borrower, you may not get the approval you are hoping for if you have bad credit.
No pre-payment penalties
Prepayment penalties are designed to deter people from paying off the balance of a loan before the stated timeline. If you've inherited money or have gotten a hefty bonus at work, you can use the funds to prepay any of Prosper's products without fretting about prepayment penalties. This allows you to become debt-free early and get on with your life.
Auto-invest
Set it and forget it! If you'd like to take your hands off the steering wheel, Prosper's auto-invest feature will automatically reinvest the interest earned based on your selected parameters. There are no minimum account requirements to use the feature. You can pause auto-invest anytime from your account dashboard and place manual orders if you'd like to get hands-on. You cannot cancel or withdraw an auto-invest order, however.
Large ATM network
The Prosper credit card is accepted at any ATM where Mastercard is accepted. More than two million ATMs in over 210 countries accept Mastercard, meaning no matter where you are, you can withdraw money. The best part? Prosper doesn't charge any ATM fees, though a third-party fee may apply.
Human support
I'm not a big fan of having to chat with robots or navigate self-service portals to solve a problem I'm facing. Thankfully, that's not a problem with Prosper. The company's support team comprises actual humans, and it has dedicated support staff for each of its products, including one for general correspondence.
FDIC insured
Investors deploying money through Prosper would be happy to know that the cash portion of their investment account is FDIC-insured by Wells Fargo Bank up to the aggregate amounts set by the FDIC. Any money you lose because the borrower defaulted isn't FDIC-insured.
Who should or shouldn't use Prosper?
Prosper has a lot going for it, as you can tell. Personal loans start at just $2,000, with no pre-payment penalties. But Prosper only entertains individuals with a credit score of more than 600, so you may have to look elsewhere if you have a bad credit score. But Prosper also falls short in a few other departments. First, it charges an origination fee, and there's no discount for people who enable auto pay on their credit cards, which typically ranges between 0.25 to 05 percentage points. But the company does away with the annual fee for those who have auto-pay enabled.
Use Quicken Loans to Get a Personal Loan
- If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
- TrustPilot Rating 4.6 out of 5
- Connect with lenders for $0
- 100% online experience.
Pros & cons
Pros
- Prosper offers instant approval of your application and funds are disbursed within one business day.
- The company allows you to change your payment date.
- Prosper has a wide catalog of products.
Cons
- If you live in Iowa, West Virginia, or any of the U.S. Territories, you may be unable to use Prosper.
- The company doesn't offer rate discounts.
- Prosper's products are exclusive to people with a credit score of more than 600.
Prosper vs. competitors
Prosper has many products, but we'll focus on personal loans for this comparison, which helped put Prosper on the map.
Platform | Products offered | Credit score | Loan amount |
Prosper | Personal loans, credit cards, home equity loans, investment, and IRAs | 600+ for personal loans | $2,000 to $50,000 for personal loans, credit card limit of up to $3,000 |
Upstart | Personal loans, car refinance loans, small business loans | At least 300 for a loan | $1,000 to $50,000 for personal loans, at least $9,000 for car refinance loans, |
SoFi | Personal loans, credit cards, insurance, private student loans, mortgage loans | At least 680 for personal loans | $5,000 to $100,000 for personal loans |
Upstart
The major difference between Upstart and Prosper lies in the credit score requirement. Upstart has a much lower requirement, meaning these loans suit people with bad credit. You can repay the loan over three to five years with fixed interest rates of 6.4% to 35.99%. Like Prosper, Upstart doesn't charge pre-payment penalties either, and it does a soft credit pull. Upstart also lets you borrow money for education-related purposes, something Prosper doesn't allow you to do.
SoFi
SoFi is a personal finance company that offers a suite of financial products. But it has high credit score requirements. Unlike Prosper, SoFi doesn't charge you with origination fees or late fees. It doesn't charge closing costs or prepayment penalties either. There's also an autopay discount of 0.25%, something Prosper doesn't offer. Funds are disbursed within a few days of you signing the agreement. You can expect an APR of 8.99% to 25.81% on personal loans.
FAQs
Does Prosper operate in all U.S. states?
If you're a resident of West Virginia, Iowa or any of the U.S. Territories, you may be unable to sign up for Prosper's products.
Is there a minimum credit score requirement for a loan?
Prosper requires borrowers to have a minimum credit score of 640.
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.
What does the repayment timeline look for personal loans?
You can repay a Prosper personal loan in three to five years.
Use Quicken Loans to Get a Personal Loan
- If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
- TrustPilot Rating 4.6 out of 5
- Connect with lenders for $0
- 100% online experience.
Is Prosper legit?
Prosper offers a host of financial products – whether you need a personal loan or a credit card or are looking to invest some money, Prosper has something for everyone. The company doesn't charge pre-payment penalties; you can get up to $50,000 in personal loans. But because the company does a soft credit pull that doesn't affect your credit score, you can check your rates without worrying about your score being affected.
Joy Wallet is an independent publisher and comparison service, not an investment advisor, financial advisor, loan broker, insurance producer, or insurance broker. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. They are not intended to provide investment advice. Joy Wallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. We encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Featured estimates are based on past market performance, and past performance is not a guarantee of future performance.
Our site doesn’t feature every company or financial product available on the market. We are compensated by our partners, which may influence which products we review and write about (and where those products appear on our site), but it in no way affects our recommendations or advice. Our editorials are grounded on independent research. Our partners cannot pay us to guarantee favorable reviews of their products or services.
We value your privacy. We work with trusted partners to provide relevant advertising based on information about your use of Joy Wallet’s and third-party websites and applications. This includes, but is not limited to, sharing information about your web browsing activities with Meta (Facebook) and Google. All of the web browsing information that is shared is anonymized. To learn more, click on our Privacy Policy link.
Images appearing across JoyWallet are courtesy of shutterstock.com.
Writer
Jasir Jawaid is Joy Wallet's Assistant Editor. He has more than 13 years of experience as a journalist covering Wall Street, equities, financial policy and regulation, and cryptocurrency and blockchain.
Share this article
