Prosper Prosper
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Prosper Review

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Rating:
Bottom Line:
Great choice for those with good/average credit or better; Low interest rates, personalized application process and a unique rating system

Full Review:
Looking to take out a loan but don't want to deal with a bank? Prosper offers a simple online peer-to-peer lending system that puts you in control of your loan application. Not only can you get the help of family and friends to get your loan started, but the proprietary rating system Prosper uses to determine interest rates helps ensure you will get the lowest possible rate based on your individual qualifications, rather than standard criteria.


Types of Loans Available

Prosper functions as a peer-to-peer loan service that lets you apply for a loan and receive funding from a number of investors rather than a single bank or financial entity. These investors are also customers of Prosper — other ordinary people like yourself — who use the service as an investment tool to make money. Prosper offers prospective borrowers unsecured loans, meaning you do not have to put up collateral such as an automobile to receive funding. You can request between $2,000 and $35,000, and your loan will be fixed rate with potential interest rates starting at a 5.99% APR and ranging up to a 36% APR.


Some of the ways Prosper suggests to use your loan include military-related costs — such as moving — debt consolidation, jump-starting your small business and adoptions. The only restriction in place is for student loan and other college expenses use — a common factor across the board for most personal loan services due to federal restrictions regarding private education loans.


Qualifying

In order to qualify for a loan, you must have a U.S. bank account, a state-issued driver's license or ID and a minimum 640 credit score. To help ensure consistency across the board for all loan applications, Prosper uses something it calls a "Prosper Rating" to evaluate your loan application. The rating system, which consists of a grade range from AA down to HR, allows investors to make an easy decision about whether to fund your loan or not by showing the level of risk for default and the estimated annual average loss rate to the investor.

While the Prosper Rating factors in your credit score, it also measures of your Prosper Score — which looks at how many inquiries there have been on your credit reports over time, the number of delinquent accounts you have, credit card use, debt-to-income ratio and, if applicable, your payment performance on prior Prosper loans. An evaluation of this criteria will then assign you a score from 1 to 11, which indicates the risk of you defaulting within the first 12 months of your loan. A score of 11 is the best you can hope to receive in this situation.


Prosper then uses this score in conjunction with the length of the loan term you choose and the current economic and competitive environments to determine the final Prosper Rating for your loan application. Your rate also determines how much your closing fee will cost.

Currently, Prosper is not available to those living in Iowa, Maine and North Dakota, so keep that in mind before applying for a loan if you live in one of these states.


Application Process

The application process begins with a simple online form that asks for some personal information as well as basic information on how much you'd like to borrow and what you are using the loan for. You will need to agree to allow Prosper to perform a credit check. An identity check will also be performed. Once your application has been processed and you receive your Prosper Rating, it is time to list your loan request. Within your listing, you can tell prospective lenders about yourself and how you plan to use the money, which we found to be a nice personable touch that you don't typically expect from a loan experience.

To help ensure a better chance of getting your loan, you can keep an eye on where you are within Prosper's 3-stage verification process. Different from the Prosper Rating, your verification stage is an indication that your necessary paperwork and information have been received and verified. According to Prosper, 63% of loan requests by borrowers who reach Stage 3 in the process will receive full funding. Another way to help your loan get approved is to request friends and family to invest small amounts — this enhances your credibility and shows you are viewed as a trustworthy person in the eyes of people to whom you matter. Additionally, you can ask an existing Prosper member to endorse you, which can be helpful to boost your chances, especially if they are a lender.

Loan requests are active for 14 days. During this time, lenders will be able to view and fund your loan. The listing is closed once your loan is fully funded or the 14-day period ends — whichever comes first. Once the closing fee has been taken from the amount received, the rest of the money will be deposited into your bank account. If your loan did not receive the minimum amount of funding required, it will not be approved. However, if your loan receives 70% or more of funding you can choose to accept that amount. If you did not receive the funding you desired or reach the minimum, you have the option to create a new listing and try again.


Repayment and Fees

Prosper does not charge fees to apply for a loan, but there is a closing fee taken from the total amount you receive in your loan before the rest of the money is transferred to your bank account. This fee depends on your Prosper Rating and can range from 1% to 5% depending on your rating and the length of your loan term. Prosper points out that it is important to keep the closing fee in mind when requesting your loan amount. If you're planning to use the money for something with a specific cost, you will want to ensure that you will receive enough after the closing fee has been processed.


Prosper offers fairly simple repayment options. Repayment periods are either three years or five years, depending on the amount you are borrowing and the Prosper Rating of your loan. Prosper loans are fully amortizing, which means that the payments will all be the same, and your final payment will be equal to the others and fully pay off all that remains of the principal balance and interest. Payments are made monthly, and you can choose to pay by automatic withdrawal from your bank account, manually through your online account, by phone or by mailed check. There are no additional fees for paying through alternate means. You are free to pay more than your minimum payment in a given month or fully pay back your full loan amount early without penalties.

If a payment is more than 15 days late, a $15 payment will be charged. This fee will be passed on to your investor(s) and not retained by Prosper. There is also a $15 fee on failed payments — such as an error with your bank or a bounced/returned check. This fee is retained by Prosper.


Trustworthiness

Prosper loans are made through WebBank, which is an FDIC-insured industrial bank located in Utah that has been in business since 1997. Both WebBank and Prosper currently have an A+ rating on the BBB and are accredited by the organization. Prosper promises to protect your identity through the lending process and will not reveal any of your personal information to investors at any point during the process.


Customer Support

Prosper offers customer service via email and telephone, though email support is only for those with a registered Prosper account. If you have questions before submitting a rate request, you will need to call. Phone support hours are Monday through Friday from 8 a.m. to 9 p.m. ET and Saturday from 9 a.m. to 5:30 p.m. ET. When we called, we found the representatives to be friendly, courteous and knowledgeable.


Conclusion

If you have average/good credit or better and are looking for a personalized way to take out a loan, Prosper is the way to go. The proprietary rating system and ability to use friends and family as goodwill investors can be great for those who can't rely on credit alone. In addition, the long repayment periods and fixed interest rates ensure stability for borrowers.

Apply for Prosper | Compare to other Personal Loan Services

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Service Details

Minimum/Maximum Loan Amount:$2,000 - $35,000
APR:5.99% - 36%
Terms Available:36 or 60 months
Required Credit Rating:640+
Secured/Unsecured:Unsecured
Local Branches:No

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