Prosper offers several features that might appeal to personal loan borrowers, and to name a few:
Wide range of loan amounts: Prosper offers personal loans ranging in amount from $2,000 to $40,000. While the upper limit of $40,000 isn’t exactly the highest in the industry, it’s enough for most borrowers. And at the low end, $2,000 is less than many competitors are willing to lend.
Next Business Day Funding: Prosper funds its loans within one business day of final loan approval. To be clear, this is when Prosper sends the money – the timing for it to actually appear in your bank account also depends on their processes.
No prepayment penalty: As you will see in the next section, one of the disadvantages of Prosper is that there are only two choices of repayment term: 3 years or 5 years. However, there is no penalty if you choose to repay your loan sooner, so if you want to a repayment term of 4 years, for example, you can simply accept a loan term of 5 years and pay it off a little faster than necessary. It won’t cost you anything extra.
Rates easy to consult online: Prosper makes it easy for borrowers to get personalized rate offers without affecting their credit score. The online pre-qualification process takes just minutes and performs a soft credit check to reveal a variety of loan options.
Co-borrowers are allowed: Prosper is one of the few personal lenders that allows joint loan accounts. For example, if you and your spouse want to apply for a loan together, that’s an option. Or, if your credit isn’t particularly strong, you can hire a creditworthy co-borrower for better loan terms.
Several loan objectives: Prosper offers personal loans for three specific purposes: debt consolidation, healthcare expenses and home improvement. The process of obtaining these loans is identical, all have the same loan minimums and maximums, and in all cases the money is distributed to the borrower’s bank account just one business day after accepting an offer of ready. It’s also worth noting that you can use the proceeds of a personal loan for just about anything you want – after all, the whole concept of a personal loan is that the loan is not backed by any specific asset (such as a mortgage is backed by a house).
What could be improved
There is no perfect lender for everyone, and Prosper is no exception. While there are several things to like about Prosper’s loan process, here are some potential downsides:
Only two repayment term options: Prosper only offers loan repayment terms of three and five years, while many competitors offer a wider variety of terms ranging from two to seven years. Granted, most borrowers’ needs can be met with a three- or five-year repayment term, but there’s not as much flexibility as some rivals offer.
High APR Range: The APR given to each particular borrower depends on a variety of factors, but Prospers’ rate on the lower and upper ends of the spectrum is relatively high. And to be clear, these APRs include Prosper’s setup fee.
Creation costs: All loans made by Prosper carry origination fees, which vary from 2.41% to 5%, depending on the borrower. These are included in the quoted APR, but the important thing to understand is that these origination fees are deducted from the loan proceeds before they are distributed. In other words, a $10,000 loan with a 5% origination fee would result in $9,500 being deposited in your bank account.
No Loan Financing Guarantee: As Prosper is a peer-to-peer lending platform, it relies on individual and institutional investors to fund loans. For this reason, even if you are approved for a loan, there is no guarantee that your loan will have enough lenders in a timely manner, if at all. This is rarely a problem in practice, but it’s worth noting.