Prosper; Alyssa Powell/Insider
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The bottom line: Prosper Personal Loan is a good lender if you're looking to apply for a joint loan or don't have the best credit score. But with its lengthy list of fees and stringent eligibility requirements, you might get a better deal elsewhere.
How Prosper worksProsper Personal Loan provides unsecured personal loans through WebBank (Member FDIC). You aren't required to put up any collateral, such as a house or car, to get an unsecured personal loan. You can use a personal loan for a variety of purposes.
Prosper loan amounts range from $2,000 to $40,000, and the company offers loans to residents of all 50 states and Washington, DC. You can take out a loan for either three or five years.
You will receive an APR between 7.95% and 35.99% with Prosper, depending on your creditworthiness and ability to repay the loan, among other factors. This is comparable to similar companies' APR ranges. For instance, Avant's APR range is 9.95% to 35.99%, and LendingClub's range is 8.05% to 35.89%.
You can apply with a co-borrower and potentially be eligible for a lower rate if their credit score is in better shape than yours.
As an alternative to a personal loan, you may also consider credit cards for people with bad credit, as you may get a lower APR and better terms with a credit card. Figuring out the pros and cons of each choice will help you get the best deal possible.
Most loans from Prosper Personal Loan are approved within one day, and depending on your bank, it may take one to three business days to receive funds in your bank account.
However, for you to get your money, a Prosper investor must choose to fund your loan. Prosper is a peer-to-peer lending company that connects borrowers and investors.
Per the company's website, investors usually will agree to offer funding before the approval process is completed (in three days or less). But they have up to two weeks to invest in your loans. If your loan does not garner at least 70% funding after 14 days, then the company will deny your application.
You may pay multiple kinds of fees with a Prosper loan, including an origination fee, a check payment fee, a late fee, and an insufficient funds fee. That said, you don't have to pay a prepayment fee if you pay off your loan early.
To contact customer support. call Monday through Friday, 9:00 a.m. to 8:00 p.m. ET, or on Saturday from 9:00 a.m. to 5:30 p.m. ET. You can also send an email or paper mail.
There are a variety of reasons you can take out a personal loan from Prosper:
- Debt consolidation
- Home improvement
- Medical or dental bills
- Big purchases
- Auto expenses
- Household expenses
- Special occasions
- Business
- Taxes
- Vacation
- Baby and adoption
- Other (not defined on Prosper's website)
You cannot use a Prosper personal loan for educational expenses, like tuition or room and board at a college, university, or vocational school.
You'll need to meet the following requirements to apply:
- Be at least 18 years old
- Have a checking or savings account
- Have a social security number
- Have at least a 640 credit score
- Have fewer than five credit bureau inquiries (after excluding duplicate inquiries) within the last six months
- Earn an annual income greater than $0
- Have a debt-to-income ratio of no more than 50%
- Have at least three open trades reported on your credit report
- Have not filed for bankruptcy within the last 12 months
You'll need a credit score closer to the higher end of "fair" to qualify for a loan. Credit scores range between 300 and 850, and you'll need a minimum credit score of 640 to qualify for a Prosper Personal Loan personal loan.
You can check your credit score for free on annualcreditreport.com from any of the three major credit bureaus once per week during the pandemic.
Here's how scores break down, according to FICO:
- Very poor: 300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Exceptional: 800 to 850
Your credit score won't be affected if you check your rates through Prosper, because the process only results in a soft credit inquiry.
Once you accept an offer and officially ask for a loan from Prosper, the company will perform a hard credit inquiry, which will probably impact your credit score. A hard inquiry gives a lender a comprehensive view of your credit history, but might hurt your credit score as a result.
Keep in mind, the higher your credit score, the better APR you are likely to receive. If your credit score is toward the bottom of Prosper's accepted range, you may think about using some of these tips to boost your credit score:
- Ask for and look over a copy of your credit report. Search for any errors on your report that may be damaging your score. If you find any, reach out to the credit bureau to discuss rectifying the error.
- Maintain low credit card balances. Keeping a credit utilization rate — the percentage of your total credit you're using — of 30% or less will prove to lenders that you can handle your credit well.
- Design a system for paying bills on time. Your payment history comprises a large percentage of your credit score, and lenders prefer to see steady and reliable payments in the past. Create calendar reminders or set up automatic payments so you don't fall behind.
Prosper Personal Loan is a Better Business Bureau-accredited company and is rated A+ in trustworthiness by the BBB. The BBB evaluates trustworthiness by measuring business' replies to consumer complaints, honesty in advertising, and clarity about business practices.
You aren't guaranteed to have a great relationship with Prosper even though the company has a great BBB rating. Make sure you also read reviews and talk to friends and family about their experiences with the company.
In 2019, the SEC accused Prosper of miscalculating returns and misleading investors. The SEC claimed that exaggerated annualized net returns caused investors to make more investments. In the settlement, Prosper paid $3 million.
Though Prosper has an excellent BBB rating, you may want to look elsewhere if you are turned off by the company's 2019 controversy.
The pros and cons of Prosper personal loans Pros- Ability to add a co-borrower to your account. If your credit score isn't in the best shape, you can apply for a joint loan to get a better rate.
- Many ways to use your loan. Prosper allows you to use your loan funds for anything from home improvement to taxes to adoption.
- High minimum and maximum APR. While comparable to some loan companies' APR ranges, Prosper's APR range of 7.95% to 35.99% is still high. It's more than Marcus' range of 6.99% to 19.99%, as well as Best Egg's range of 5.99% to 29.99%.
- Many requirements to qualify. You'll have to clear a significant number of hurdles to be eligible for a Prosper personal loan. This includes a minimum credit score of 640, a debt-to-income ratio below 50%, and fewer than five credit bureau inquiries (excluding duplicate inquiries) within the last six months.
- Prosper may not find an investor for your loan. While the company says these instances are rare, if your loan does not receive at least 70% funding from an investor after 14 days, Prosper will deny your application.
The application is available online or over the phone, although you can't apply for a joint loan over the phone. It can be completed in several minutes. You'll need basic information for the initial application, including:
- Name
- Contact information including your address, phone number, and email
- Date of birth
- Social Security number
- Individual annual income
- Any additional income you may receive
- Income type
- Monthly rent or mortgage payment
Prosper Personal Loan may ask you to upload certain financial or employment documentation to confirm the details you input on your application. You can submit any required documents and check on their status through your Prosper account. You can also email those documents, but be sure that email is from the same email address you used when you joined Prosper.
You should receive your funds within one to three business days after your application is approved.
How does Prosper compare to other personal loan lenders?Although rates are unique to your situation, Prosper's interest rates are in line with those offered by comparable lenders. Here's how Prosper compares to similar companies:
 Prosper |  Lending Club |  Avant |
Min. credit score 640 | Min. credit score Unspecified | Min. credit score 600 |
APR 7.95% to 35.99% | APR 8.05% to 35.89% | APR 9.95% to 35.99% |
Origination fee? Yes | Origination fee? Yes | Origination fee? No* |
| Prosper Personal Loan | Personal Loans | Avant Personal Loans |
*While Avant does not charge an origination fee, it does charge an administration fee of up to 4.75%.
Prosper review vs. LendingClub reviewBoth Prosper Personal Loan and LendingClub will charge you an origination fee. Prosper's origination fee varies between 2.41% to 5% of your total loan amount, while you'll pay a fee of 1% to 6% with LendingClub. This fee will be included in your overall APR and will be deducted from your loan proceeds.
You may get your funds marginally faster with Prosper than LendingClub. Prosper will often take between one to three days to send you your money, while LendingClub may take between two to four business days. However, keep in mind that Prosper will not send you any money until they have an investor to back your loan.
Prosper has a minimum credit score requirement of 640 to qualify for a loan, while LendingClub's requirement is unspecified. If your credit score is below 640, you might decide to add a co-borrower with Prosper or pivot to LendingClub.
Prosper review vs. Avant reviewProsper Personal Loan has a minimum credit score requirement of 640, while most of Avant's customers have a credit score between 600 and 700. Both companies offer loans to people with fair credit, but if your score is on the lower end of the "fair" threshold, you may have better luck with Avant.
Prosper doesn't have a mobile app for borrowers, while Avant does. So if you want to manage your personal loans on the go, you might consider choosing Avant.
Ryan Wangman is a reviews fellow at Personal Finance Insider reporting on mortgages, refinancing, bank accounts, and bank reviews. In his past experience writing about personal finance, he has written about credit scores, financial literacy, and homeownership.
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