Prosper is an online, peer-to-peer lending marketplace. The first of its kind in the United States, Prosper connects borrowers with potential investors — individuals or organizations — who then lend specific amounts under fixed terms and fixed rates. According to Prosper, the organization has facilitated more than $16 billion in borrowing for almost 1 million borrowers.
If you’re looking for easy-to-access personal loans with short terms and fixed interest rates, Prosper offers the potential for quick connections and secure borrowing. If you need more traditional lending products such as mortgages or longer-term loans, this peer-to-peer marketplace may not meet your needs.
Prosper at a glance
- Easy online portal to specify loan amounts and choose rates
- Soft credit checks
- Fixed interest rates
- Max term length of five years
- Mortgages are unavailable
- Loans include origination fees
What’s interesting about Prosper
Prosper’s peer-to-peer model opts out of the traditional lender ecosystem to directly connect borrowers and investors. Its online portal makes it easy to ask for the money you need, receive multiple offers and then determine best the rates and terms for your finances. Everything is done entirely online, streamlining the whole process and making it more efficient than ever. What’s more, Prosper only uses soft credit checks, which won’t put a dent into your score. Finally, if you decide to pay off your loan early, you won’t have to deal with pesky fees or penalties.
Things to consider
Prosper doesn’t offer secured loans such as mortgages and only supports loan requests up to $40,000. The lender also charges an “origination fee” that varies between 2.41% and 5% depending on the amount and term of the loan. Along with fees for investors, the origination fee is how the company generates revenue — although it acts as a secure platform for peer-to-peer loans, the capital used for these loans comes directly from personal and business investors.
Personal loans from Prosper range in size from $2,000 to $40,000. Terms are between three and five years with fixed-rate interest over the duration. Borrowers make a single monthly payment that includes principal and interest, and the loan is fully paid back by the end of the term. Late fees apply if your payment is not made on time, but you can make prepayments at any time without penalty.
To apply for a personal loan, borrowers complete forms on the Prosper site detailing their personal financial details, credit score and how much they’d like to borrow. If approved, Prosper offers borrowers multiple loan rates and terms to help find their best fit. Loan funds are deposited directly into your bank account, typically within a few days.
Prosper doesn’t currently offer mortgage loans. However, if you’re looking for an online mortgage option, consider lenders such as Quicken, which offers multiple mortgage types, including:
- Adjustable-Rate Mortgages: Includes fixed interest rates for the first five, seven, or ten years followed by variable rates on par with market averages.
- YOURgage: Includes a fixed interest rate and terms ranging from eight to 29 years depending on your current financial situation and mortgage goals.
- FHA Loan: For borrowers with lower than average credit scores who want to buy a home with as little as 3.5% down.
Prosper doesn’t currently offer any mortgage refinancing options.
Online loan service Quicken also offers refinancing options, including cash-out loans using FHA loan structures to refinance up to 85% of your home’s value. You can also access VA loans if you’re a veteran, military member or spouse to refinance 100% of the value of your home. Other refinancing options include lowering payments with a new 30-year fixed-rate loan or saving money over the short-term with an adjustable-rate five-, seven-, or 10-year mortgage.
Home equity loans and HELOCs
Prosper now offers home equity lines of credit (HELOC) options for qualified borrowers. Just like their personal loan options, Prosper lets borrowers ask for the amount they want, provide basic credit and home details and then receive online approval. You can borrow up to $500,000 with a Prosper HELOC, but you’ll still be subject to an origination fee. Since a HELOC uses the equity in your house as security, it is considered a secured loan and often provides access to lower interest rates.
While Prosper HELOCs are variable rate, you can choose to lock in fixed rates for some or all of your HELOC amount three times over its term. Monthly payments are also flexible — you can choose to prepay early or make interest-only payments. In addition, you only pay interest on money used, even if you’re approved for more.
Vehicle loans from Prosper differ from traditional models because they place no restrictions on the type or age of the car you purchase. Prosper’s vehicle loans are dependent on your credit score and use soft checks to ensure your credit isn’t damaged if you’re not approved. It’s worth nothing that vehicle loans from Prosper are unsecured, meaning they may be subject to higher interest rates. And just like other Prosper loan products, your vehicle loan comes with an origination fee ranging from 2.41% to 5% depending on the term length and the amount borrowed.
The final word
Prosper’s unique, peer-to-peer lending structure helps borrowers access personal loans, HELOCs, or vehicle loans online and on-demand. The fixed-term, fixed-rate structure of personal loans makes it easy to see exactly how much you’ll pay over the loan period, and there are no penalties for early prepayment. Prosper’s new HELOC options provide an easier path to equity-based funding than many traditional lenders.
Missing from Prosper’s loan lineup are mortgages and mortgage refinancing — other online lenders offer these options if you’re planning to buy a house or change your current mortgage structure. In addition, all Prosper loans come with an origination fee. If you’re looking for a personal loan of up to $40,000 over a fixed term with multiple interest options, Prosper has you covered. However, if you need mortgage loans or refinancing, consider other online lenders.