When it comes to peer-to-peer lending, you have many options. LendingClub and Prosper are two choices that have established themselves for borrowers.
Both lenders say they can save borrowers money on personal loans. But there are some key things to consider before deciding which is the best fit for you as a borrower.
LendingClub and Prosper personal loans compared
Overall, Prosper and LendingClub rates and terms are very similar. Both offer a quick and convenient online application process, as well. But they do have a few differences:
|Loan amount||$1,000 to $40,000||$2,000 to $40,000|
|Rates||Fixed: 6.95% - 35.89% APR||Fixed: 6.95% - 35.99% APR|
|Term length||3 to 5 years||3 to 5 years|
|Minimum qualifications||• Debt‐to‐income ratio below 40% (excluding mortgage)|
• Minimum credit history of 36 months
• Have five or fewer inquiries on your recent credit profile in the last six months
• Two current revolving accounts
|• Debt‐to‐income ratio below 50%
• No bankruptcies filed within the last 12 months
• Fewer than five credit bureau inquiries within the last six months
• Minimum of three open trades reported on your credit report
|Origination fee||1% to 6% of loan amount||2.41% to 5% of loan amount|
|Best for||Good credit||Home improvement|
LendingClub personal loan eligibility
LendingClub will check your credit history before approving you for a loan, but does not necessarily verify your income or employment information. However, you can use a cosigner when borrowing from LendingClub.
How to qualify
To borrow from LendingClub, you must:
- Be a U.S. citizen or permanent resident (loans not available to residents in Iowa, though)
- Have a valid email account
- Have a U.S. Social Security number
- Have an account at a U.S. financial institution with a routing transit number
- Have a debt-to-income ratio below 40% (excluding mortgage)
- Have a minimum credit history of 36 months
- Have five or fewer inquiries on your recent credit profile in the last six months
- Have at least two current revolving accounts
Based on your credit information, loan term, loan amount and a proprietary scoring model, you’ll be assigned one of 35 loan grades. You’ll be assigned a fixed interest rate based on your loan grade and estimated default risk.
You can prepay your loan at any time without penalty. If your payment is late, however, you’ll owe fees and may be referred to a third-party collection agency.
Business loans and custom program loans (for education or medical expenses) are also available.
How long does it take to receive funds?
If you’re approved for a loan with LendingClub, you can get your money in as soon as a few days.
Although the interest rate you receive depends on your credit score and credit history (including debt-to-income ratio), LendingClub personal loans have interest rates between 6.95% - 35.89% APR.
Most personal loan lenders charge an origination fee, which is a payment charged for processing the loan. LendingClub loans have an origination fee of 1% to 6% of loan amount.
LendingClub might be the best option if:
- You have a debt-to-income ratio below 40%
- You have a cosigner
- You need to consolidate debt
Prosper personal loan eligibility
From an internal viewpoint, the Prosper lending model is quite similar to that of LendingClub, in that it uses WebBank of Utah to originate the loans it buys. Prosper, however, doesn’t allow cosigners.
How to qualify
Prosper uses its owns rating system to assign fixed interest rates to the loans it approves. To borrow from Prosper, you must have:
- A valid bank account
- A U.S. social security number
- A debt‐to‐income ratio below 50%
- A stated income greater than $0
- No bankruptcies filed within the last 12 months
- Fewer than five credit bureau inquiries within the last 6 months
- A minimum of three open trades reported on your credit report
How long does it take to receive funds?
If you’re approved for a loan with Prosper, you can get your money, on average, within five days of accepting your offer.
Although the interest rate you receive depends on your credit score and credit history (including debt-to-income ratio), Prosper personal loans have interest rates between 6.95% - 35.99% APR.
Most personal loan lenders charge an origination fee, which is a payment charged for processing the loan. Prosper loans have an origination fee of 2.41% to 5% of the loan amount.
Prosper might be the best option if:
- You have a debt‐to‐income ratio below 50%
- You have a higher income
- You need a loan for home improvements
LendingClub vs. Prosper: P2P lending
Although the two lending platforms are similar, each has certain advantages and eligibility requirements.
Make sure that as you’re considering a personal loan, you explore all of your options and compare rates from multiple lenders, so you can find the loan that’s right for you.
Eric Bank contributed to the reporting for this article.
About Rates and Terms: Rates for personal loans provided by lenders on the Credible platform range between 3.99% - 35.99% APR with terms from 24 to 84 months. Rates presented include lender discounts for enrolling in autopay and loyalty programs, where applicable. Actual rates may be different from the rates advertised and/or shown and will be based on the lender’s eligibility criteria, which include factors such as credit score, loan amount, loan term, credit usage and history, and vary based on loan purpose. The lowest rates available typically require excellent credit, and for some lenders, may be reserved for specific loan purposes and/or shorter loan terms. The origination fee charged by the lenders on our platform ranges from 0% to 8%. Each lender has their own qualification criteria with respect to their autopay and loyalty discounts (e.g., some lenders require the borrower to elect autopay prior to loan funding in order to qualify for the autopay discount). All rates are determined by the lender and must be agreed upon between the borrower and the borrower’s chosen lender. For a loan of $10,000 with a three year repayment period, an interest rate of 7.99%, a $350 origination fee and an APR of 11.51%, the borrower will receive $9,650 at the time of loan funding and will make 36 monthly payments of $313.32. Assuming all on-time payments, and full performance of all terms and conditions of the loan contract and any discount programs enrolled in included in the APR/interest rate throughout the life of the loan, the borrower will pay a total of $11,279.43. As of March 12, 2019, none of the lenders on our platform require a down payment nor do they charge any prepayment penalties.