Everything You Need to Know About Prosper’s Personal Loans for $2,000 to $50,000
We’re going to walk through everything you need to know about Prosper personal loans. We’ve spent years in the lending industry and we track dozens of lenders. We want to bring offer that experience to you so you can decide whether you want to use Prosper to consolidate your debt, make a big purchase, or cover a monthly shortfall.
Prosper started its life as a peer-to-peer lender.
The idea was that individuals with money could directly lend to people who needed money. Things are a little different now. You can still invest in lending, but the actual lending comes through WebBank.
So, how much can you borrow from Prosper?
Prosper’s minimum loan amount is $2,000 and their maximum loan amount is $50,000. There are only a handful of lenders that will offer personal loan amount above $50,000. You can take out multiple Prosper loans, but your combined outstanding principal cannot exceed $50,000. Also, you are only likely to qualify for a second loan if you have been paying on time on the first one for at least six months.
Their loan terms range from 2 years to 5 years.
Five years is a pretty standard maximum term for loans of this size. Two years feels like it might still be a little too long if you are only borrowing $2,000. The longer your term, the lower your monthly payment, but the more in overall interest you will end up paying. Prosper does not charge a prepayment penalty, so you should always strive to pay your loan off early. If you have a term of three years or more, you can save a lot of money in interest by making extra principal payments in the first year of your loan.
To get a personal loan from Prosper, I would think you would need at least Fair credit.
For a smaller loan, you would probably need to have a credit score of 620 or better. For more substantial loan amounts, you will need Good to Excellent credit. I would think you’d need a credit score above 680. But Prosper doesn’t just look at credit score. They actually create their own rating to each applicant. The rating takes into account credit factors like credit scores, payment history, and debt-to-income ratio. It also will obviously also consider your income. But the rating also considers the purpose of the loan.
Propser APR’s on Personal Loans
The rating you get will determine how much they will lend you, but it will also determine what APR they offer you. Their lowest APR is 8.99% while their highest APR is 35.99%. Only 10% of their borrower can qualify for their lowest rate. I believe that their average interest rate is 19%. If you have fair credit, your interest rate is likely to be above 30%.
If you think you might struggle to get approved for the loan that you need, Prosper will allow you to include a cosigner. A cosigner is someone who agrees to repay the loan, if you fail to. A cosigner really only helps you out of their credit profile is stronger than yours. If you can get the loan you need on your own, don’t include a cosigner. There’s no reason to entangle a loved one in the process.
The rating that Prosper assigns you will also play a role in the size of the origination fee that they charge you. Their origination fees range from 1% up to 8%. I think any origination fee above 5% is getting on the high side, but 8% is still not the highest I have seen in the industry. The origination fee is a percentage of the borrowed amount and comes out of the proceeds of the loan. Say you borrow $10,000 with a 5% origination fee. That fee is $500 dollars. So, you will receive $9,500, but will still need to repay the $10,000. The fee is included in the APR, so if you have a loan with a low APR but a high origination fee, it’s still a low-cost loan. But, you don’t get a reimbursement of the origination fee if you pay the loan off early. So, all things being equal, it’s better to have a lower origination fee.
Prosper charges several different fees.
If you are late on a payment, they will charge you $15 or 5% of the late amount, whichever is greater. That’s a fairly reasonable late fee, but you do need to know that some lenders do not charge a late fee at all. If Prosper attempts to take your payment with an ACH draw, but you don’t have enough funds, they will charge you a failed payment fee of $15. If you don’t want to make your payments digitally, they will charge you check payment fee of $5 or 5%.
Prosper’s personal loans are unsecured installment loans.
That means that you don’t have to put up any collateral to secure the loan. If you fail to repay the loan, they can’t come after any of your assets, although that doesn’t mean that they won’t walk away without a fight. However, Prosper also offers credit that is secured by your home’s equity. They offer home equity lines of credit and home equity loans. Traditionally, credit secured by your home’s equity will have a lower interest rate and offer you higher loan amounts.
So, what can you use a Prosper personal loan for?
Lenders don’t usually restrict how you can use a personal loan. And, I think this is true of Prosper as well, but they do ask for the purpose of the loan during the application process. Your answer will play a role in the rating that they assign you. Common uses of a Prosper loan include: debt consolidation, home improvement projects, small business funding, student loan, vehicles (like a motor vehicle, RV, or boat), household expense, large purchase, medical expenses, taxes, vacation, and special occasions.
I would hope that if you intend to use the loan to consolidate credit card balances of other debt that they would weight that in your favor. Some lenders will actually pay off your other creditors for you with the proceeds of the loan. But, Prosper will not do that. When a lender doesn’t do that, it can mean that it’s harder to get approved with them. This is because they don’t take into account that the new loan won’t change your debt-to-income ratio. After all, the new loan will replace your other debts and not stack on top of them. It’s unclear whether Prosper’s rating will give you credit for that.
Let’s summarize Prosper’s personal loans.
They offer pretty standard loan amounts and pretty standard term lengths. They have a good minimum APR, but their maximum APR is nothing special. They will charge an origination fee and it can be quite high, so it will depend on what they offer you. They might offer smaller loans to people with fair credit, but they are more likely to approve people with Good-to-Excellent credit. They will accept cosigners, but they don’t offer direct debt payoff for people who want to consolidate their other debt. They charge more fees than most lenders, but none of the fees are exorbitant on their own.
Prosper could be a good lender for you, but it will entirely depend on what they offer you. That’s why we always recommend that before you accept a loan, you shop around. Every lender has a different algorithm for approving people. One might deny you while a better lender gives you an offer. You owe it to yourself to get the best deal you can. If you can, get two or three approvals before you decide who to go with. At The Yukon Project, we’ve tried to make shopping around easy. If you visit our marketplace page, you can apply to any one of our featured lenders. Behind the scenes, we will check your rate with up to 40 other lenders. Our partners use a soft credit check, so applying won’t hurt your credit score. We will show you all of the approved offers, so you can pick the loan that’s best for you.
If you have any questions about Prosper’s personal loans that we didn’t address, leave a comment below and we’ll try and get it answered. If you found this information useful, please like this video and subscribe to our channel. It really helps us out. Thanks for watching.
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