Prosper Review

Prosper Personal Loans Ratings at a Glance

What is Prosper Personal Loans?

Prosper Personal Loans is a lending platform that connects borrowers with investors. It offers personal loans for a variety of purposes, such as debt consolidation, home improvement, medical expenses, and more. Borrowers can apply for loans ranging from $2,000 to $40,000, with fixed interest rates and terms of 3 or 5 years.

Prosper Personal Loans utilizes a peer-to-peer lending model, where individual investors fund the loans and earn returns through interest payments made by borrowers. The platform provides an online application process and aims to provide borrowers with competitive rates based on their creditworthiness.

Prosper is undoubtedly a great platform that provides borrowers with various loan types and amounts, while minimal credit history is required and no minimum income set. However, the main downside to investors is that most loans on the platform aren't collateralized and if a loan goes into default, Prosper charges collection fees upward of 40%.

Debt Consolidation: The debt consolidation loan helps borrowers combine and pay off credit card balances with 1 loan.

Home Equity Line of Credit: A “HELOC” is a loan whereby the lender agrees to lend money, with the collateral being the borrower’s equity in their house. 

Home Improvement Loans: Borrowers can also use Prosper for home improvement loans. For example, a loan might go to purchase new furniture, upgrade doors and windows or hire a contractor.

Auto & Vehicle Loans: As well as new cars, Prosper can offer loans for older vehicles. It also provides the option of refinancing an existing auto loan.

Small Business Loans: Prosper offers loans listed as small business loans, but they are personal loans based on your individual credit score. 

Baby and Adoption Loans: The company allows you to apply for unsecured loans for baby expenses up to $40,000, meaning you don’t need to be a homeowner. 

Other Personal Loan Types: You can also use your personal loan for healthcare costs, engagement ring financing and special occasions while also providing green and military loans.

Best Alternative to Prosper

For investors looking for options to invest in loans with a low minimum investment, our top pick is definitely Groundfloor. The platform allows you to invest in loans backed by real estate with a minimum investment of only $10. Most loans on the platform have a return of 6% to 12% and there are no fees to the investor.

Investing in Personal or Business Loans

Investors can build a portfolio on Prosper by investing in loans. Each loan is assigned a rating from AA to HR. 

AA loans are considered lower risk, lower reward loans, while on the other end of the spectrum, an HR rating means the loan is regarded as a higher risk, higher reward. Each rating also has an estimated average annual loss rate, which you can see below. 

Source: Prosper.com

The minimum amount needed to begin investing on Prosper is $25. Average historical returns on Prosper are 5.5%.

Should you need to get in touch with Prosper, you can contact them in several ways, such as by email (support@prosper.com), phone or sending a letter to the address provided. It posts a specific email address provided to report security issues (security@prosper.com). 

Although 1 of the downsides to Prosper’s customer service offerings is that it does not provide a live chat function, all in all, its customer service is positive, with everything dealt with in a professional and friendly manner. 

The rates you pay as a borrower will, of course, vary depending on your credit history, the amount you wish to borrow and the term length you choose (3 or 5 years). Prosper charges no prepayment penalties, meaning you can pay off the loans as quickly as you are able to.

The payment process is very straightforward, with various options to choose from. For example, you can set up AutoPay, a service that automatically schedules and deducts the monthly payments from your bank account. Additionally, you can pay online, via telephone, personal check, money order or cashier’s check.

As mentioned previously, Prosper charges fees for failed payments ($15) and late payments. Late fees are 5% of the payment amount or $15, whichever is greater. 

As an investor, you pay an annual loan servicing fee set at 1% per year for each payment received from borrowers towards each note you hold. 

Collection agency fees are paid if a loan is 1 day past due and Prosper has to begin collection through one of its 3rd-party collection partners. The cost can reach up to 40% of all recovered amounts and is paid by investors and taken from the amount recovered.

Overall, despite the ease of payment, Prosper’s fees mean it doesn’t receive a high mark here.

Prosper’s app is free to download and available on iOS and Android. It has a neat, clean layout and is very straightforward. The style is similar to the website. 

The app shows 3 tabs at the bottom of the screen to navigate through the options you need. However, these options change depending on whether you are an investor or borrower. 

As far as apps go, Prosper’s is designed with the customer in mind as it is effortless to use. 

Prosper allows you to invest in loans or take out a loan, but you cannot do them simultaneously. 

The sign-up form and application process as a borrower are extremely simple and, if all goes smoothly, you could receive the funds by the next day. However, Prosper may contact you for extra information in some cases, which may take a few additional days to complete. 

The investment process is also easy. Once signed up, you can search through loans based on their rating and decide whether to invest in them. 

Another benefit of the platform is the company’s user-friendly app that allows you to manage your investments and track your performance if you are an investor. In addition, a borrower can look at their credit score and view their account balance. 

Prosper users can apply for a wide range of loan amounts ranging from $2,000 to $40,000. This feature allows borrowers to access cash for various expenses such as debt consolidation, home improvements and healthcare costs. 

Overall, Prosper facilitates personal loans easier than a bank would. 

The website and app are easy to use and made without unnecessary clutter. Furthermore, the information on both the site and app is upfront, so you don’t need to scour the web for unanswered questions. 

The quick turnaround from the user’s initial application to receiving the money (if accepted) is another plus, potentially receiving the funds the next day. The precheck also makes it easier for the user when applying. 

Prosper Marketplace vs. Competitors

Compared to its competitors, Prosper’s ease of use and the navigable site certainly stands out with all the information you need is easy to find. The app is almost better than the website in that respect. 

As an investor, the advantage of using Prosper is the low minimum investment amount, which is amongst the lowest compared to its competitors. However, you can find better returns through other alternative investment platforms that have a low minimum investment, such as Groundfloor.

In addition, as a borrower, when it comes to loan amounts, the company offers more options than most, ranging from $2,000 to $40,000. 

Prosper gets a 3.5 rating due to several reasons. Firstly, applying for a loan through Prosper is straightforward. You have a broad range of loan amounts available that can be used for a wide variety of reasons and due to the well-designed site and app, all the information you need is easily accessible without much clicking around. 

As an investor, you can easily view the potential loans and their ratings while having the ability to track your account and funds via the website or app. However, the overall returns are low compared to other investment options and the fees get quite high if a loan goes into default.

The only downside to borrowing from Prosper are the loan term options and the origination and late fees. 

Frequently Asked Questions