Peer-to-peer lending can be a great alternative to traditional banks when you need a personal loan to consolidate debt or finance a large purchase. Prosper Marketplace Inc., more commonly known as Prosper, is one of the oldest players in the “P2P” or “marketplace lending” sphere. Read on for Prosper pros and cons, eligibility requirements, and a Prosper review.
Established in 2005, this San Francisco-based company helps qualified borrowers lock in unsecured loans which are funded by investors. Read on to find out whether you should consider Prosper for your borrowing needs.
Getting a loan
Prosper’s application process begins with getting a rate quote. First, you plug in the amount you want to borrow, the purpose of the loan and your estimated credit score range. Next, you enter the following:
- Your name
- Employment status
- Annual income
- Date of birth
You’ll need to create a password to get your rate quote and agree to a soft pull of your credit. A hard pull is required if you decide to move forward with a loan. After submitting the initial application you’ll find out what kind of loan you’re eligible for.
Next, you create a listing on the site which details the amount of the loan you’re seeking and what you plan to use the money for. The listing stays open for 14 days to give investors an opportunity to contribute part of all of the funding you need. Your listing has to be funded to at least the 70 percent mark for you to get any money.
If your loan is funded, the final step is the verification and underwriting process. Once you’ve been given the green light you can expect to have the loan proceeds deposited into your bank account via electronic deposit within two business days.
Borrowers can create listings for loans ranging from $2,000 to $35,000. The APR for loans starts at 5.99 percent and goes up to 36 percent. The rates are fixed rather than variable and you have your choice of a three or five-year loan term.
There is no fee to add a listing but you will pay an origination fee if your loan is funded, which ranges from 1 to 5 percent. Prosper also assesses a $15 fee for late payments, a $15 returned payment fee and a $15 processing fee if you make your payment by phone or mail a check.
Consumer complaints and reviews
Prosper is a BBB-accredited business with an A+ rating that’s based on the number of complaints filed for a business its size and the resolution of those complaints. As of December 2015, the BBB had closed 141 complaints in the last three years. Complaints most often centered on issues with Prosper’s loan products and customer service. Of the six customer reviews listed, four of them were positive.
Prosper received a rating of 3.6 stars on CreditKarma.com. Nearly 75 percent of reviewers gave the lender four stars or higher, with a number of users citing the speed of the loan application and funding process as a major plus.
Is Prosper a good choice?
You don’t need to have perfect credit to get a loan through Prosper but it certainly helps if your goal is getting the best rate. Compared to other peer-to-peer lenders, Prosper’s minimum rate is one of the lowest around. If your credit falls in the fair range, however, be prepared to pay a steeper APR on what you borrow.
Rebecca Lake is a writer and blogger who specializes in all things finance. She likes writing about debt, credit, investing, retirement, taxes, college planning, insurance and real estate.