When it comes to peer-to-peer lending, you have many options. LendingClub and Prosper are two choices that have established themselves for both borrowers and investors.
Both say they can save borrowers money on personal loans and offer excellent returns to investors. 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|
|Fixed Rates From (APR)||6.16%+||6.95%+|
|Term Length||3 to 5 years||3 to 5 years|
|Minimum Credit Score||600||640|
|Origination Fee||1% to 6% of loan amount||2.41% to 5% of loan amount|
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. Although it might appear you’re borrowing from an independent lender, your loan originates from WebBank of Utah and is sold immediately to LendingClub, which in turn sells notes to investors based on the loans it owns.
Once in a while, LendingClub itself invests in member loans. 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 U.S. social security number
- Have an account at a U.S. financial institution with a routing transit number
- Have a minimum FICO score of 660
- 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.
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. Like LendingClub, Prosper then sells notes with a minimum size of $25, backed by the loans it buys from WebBank. The only real difference here is that Prosper first obtains sufficient bids from investors to cover the loan amount before it submits the loan to WebBank.
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
Special programs for medical purposes are also available through Prosper Health Care Lending.
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 check rates from multiple lenders, so you can find the loan that’s right for you.
Eric Bank contributed to the reporting for this article.