Prosper Personal Loans Review

Prosper Personal Loans Ratings at a Glance

Prosper does not charge prepayment fees, so borrowers can repay the loan at their own speed. 

However, Prosper does include additional fees such as late fees and origination fees. Late fees vary depending on the loan amount and have the potential to be high for a larger loan. For example, late fees can reach 5% of the payment amount, which could become expensive if you are making higher monthly payments on a loan. To protect against late payments, you can set up autopayments to avoid missing loan due dates. It’s possible to enroll in autopay when applying for a loan or to opt in from your online account. You can change the due date for your payments, so contact a member of Prosper’s service team to gain more information on repayment options. Options such as autopayments might not be ideal if you do not have enough funds within an account for the expected payments. 

Origination fees vary between 0.5% and 5%. The origination fee covers the administrative fees associated with processing the loan. 

Research loan fee structures to better understand how companies make money on their loans. For example, some companies charge higher rates while other companies charge additional fees. Calculate what type of loan structure would best meet your needs before accepting a loan. Remember to be vigilant in checking for hidden fees or charges. 

Prosper earns 4.5 out of 5 stars in terms of customer service. The company publishes a phone number and email that’s specifically designated to help clarify loan concerns and questions. The customer service phone number is available between 9 a.m. and 8 p.m. on weekdays and 9 a.m. to 5:30 p.m. on Saturdays. The times are stated using Eastern Standard Time. 

The website provides clear information on which department to contact for personal loans, credit cards and investor services. For example, general correspondence is directed to a specific email address. The website offers a physical mailing address. 

Prosper also embraces new relationships by encouraging people interested in the affiliate program to apply or contact it via email about potentially partnering with Prosper. 

The company earns high reviews on third-party sites such as Trustpilot. Customers report fast service and positive experiences. However, other sites report dissatisfaction or room for improvement in terms of payment collection.

Loan terms range between 3 and 5 years. One criterion that makes Prosper unique is that it allows borrowers to have two loans from Prosper at the same time.  

Its unsecured fixed-rate loans offer a borrower some dependability because the rate remains consistent throughout the life of the loan. 

Prosper maintains a list of special requirements a borrower must meet, including fewer than five credit bureau inquiries on your credit report from within the past six months. Prosper also requires that you must not have filed for bankruptcy within the last year. The minimum requirement for annual income is extremely low and stipulates that a borrower must have more than $0 in annual income.

Prosper allows loan prepayments so that borrowers can repay loans at their own pace. Loans can be used for a wide range of needs such as consolidating debt, big purchases and medical needs. Loans have a set fixed APR rate between 7.95% and 35.99%. The rate depends on information such as your credit score, so examine your score and determine if you need to improve it before applying for a loan. 

Defaulting on a loan will lower your credit score and could potentially hinder your ability to obtain favorable loan rates and terms in the future. If you are late on a payment, then you will have to pay a late fee of $15 or 5% of the expected payment amount, depending on which amount is larger. Late fees happen once a borrower fails to make a payment 15 days after the due date. A loan can be collected using Prosper or a third-party agency after the loan is past due.

Loan amounts are available between $2,000 and $40,000. However, it is also possible to obtain as much as $300,000 with a home equity line of credit. A home equity line of credit is also known as a HELOC, and it is riskier than a personal loan. The reason that loans such as HELOCs offer higher loan amounts stems from the fact that they require collateral in the form of your home. HELOC loans offer larger sums secured by your home, which exposes a borrower to a more risk. 

Prosper offers unsecured personal loans for up to $40,000 that do not require collateral. Unsecured loans are viewed as less risky for the borrower and can help a borrower fulfill desired financial outcomes. However, personal loans still have the potential to lower a credit score if left unpaid. 

The Prosper website offers a section dedicated to helping interested borrowers learn more about loan options by checking personalized rates. Using the check-your-rate feature on the website will not impact your score because it is not a hard inquiry when you are examining loan options. 

Loans can be funded within a business day although that time period is not guaranteed and approval can take longer. Prosper requires a minimum score of at least 640. A credit score tells lenders what level of risk a potential borrower is. For example, higher credit scores tell lenders that you are more likely to repay the funds. Credit scores range between 300 and 850, so a score of 640 is a fair score. 

Prosper vs. Competitors

One benefit that makes Prosper stand out from the competition is that it allows borrowers to have two Prosper loans at the same time. Most lenders allow borrowers to have a single loan at a time. Prosper also allows joint applications with two borrowers. The company accommodates a broad range of personal loan needs. However, Prosper offers personal loans that provide a limited loan amount.  

Overall, Prosper ranks 4 out of 5 stars. Prosper ranks highly in terms of customer service and provides phone and email availability so borrowers are able to discuss questions and concerns with a representative. 

The company does not require prepayment fees but uses additional late fees and origination fees that could potentially hinder a borrower’s ability to repay a loan. Prosper has room for improvement in terms of having a higher minimum credit score requirement. The elevated credit score requirement makes it more unattainable for people with lower credit scores to apply for and receive a loan.

The company provides unsecured loan options that offer personal loans on a peer-to-peer funding basis to people with fair credit scores.

Frequently Asked Questions

Personal loans from Propper provide a way for borrowers to receive larger amounts of funds within constrained timelines. Before applying for a loan, research options available to your situation. Taking out a loan requires a certain level of mindfulness, so examine options while considering your personal information such as your credit score and personal financial history. 

Does Prosper require proof of income?

Yes, Prosper does check income. The company requires proof of income to verify a borrower’s income level and financial information. It’s possible that funding will be delayed while the company examines a borrower’s information. The loans will only become available and originate once the process of verification has been completed. Prosper may deny a loan if it is unable to verify the borrower’s information. 

What bank does Prosper use?

Prosper uses WebBank to provide loan funding. The company works with WebBank in combination with the Prosper marketplace to provide loan funds.

WebBank was first founded in the late 1990s in Utah. The company is now based in Salt Lake City, Utah, and offers a wide range of financial options. For example, WebBank offers deposit products and works with a wide range of partners such as Prosper. 

How does Prosper make money?

Prosper makes money through its fees. The company has origination fees and servicing fees. Origination fees range between 1% and 5%. The fees reduce the loan amount, so it’s important to calculate a high-enough loan amount to account for the fees. For example, if you need a $10,000 loan then likely ask for a loan that is about 5% or more to accommodate potential origination fees. The transaction fee varies depending on additional factors such as the loan amount and the state. 

The company charges servicing for each loan payment. Service fees are typically lower and range around 1% of each payment per year. Prosper offers a clear explanation on its website of how the fees are calculated. 

Before signing up for a loan, examine your financial situation and consult a financial professional to better understand which loan and loan amount would work best with your situation. 

Sources

1. WebBank. “About Us.” Accessed April 30, 2022.
2. Prosper. “How does Prosper make money?” Accessed April 30, 2022.
3. Prosper. “Loan Amount.” Accessed April 30, 2022