Overview - Prosper
Today, peer-to-peer lending is becoming more popular than applying for a loan at your local bank. Prosper is the perfect example of this, offering low rates because it isn’t an actual bank. There is no need for branches scattered around the country or the world because everything a borrower needs is in one online place.
Prosper’s motto is to “Make Loans Simple” by offering low-interest rates, fixed terms for three or five years, a single monthly payment, no hidden fees, and no prepayment penalties. You’ll find that low overhead has much to do with why the company can offer rates that are 5 percent better than those on its credit cards.
Prosper offers loans to borrowers in all states.
Applying for a Prosper Loan
The low cost can make applying for a Prosper.com loan attractive. The fixed rates are attractive, as well, since you’d never need to worry about payments increasing over time, even if the payment is late.
Once you consider this Prosper review and do research of your own, you can apply for a loan by doing the following:
- Use the online interest rate checker. The form asks a few questions, such as contact information and salary, so that the lowest eligible rate can be determined in minutes. The credit check that is performed is a soft check that doesn’t harm your credit score.
- Once presented with a rate and approval for a loan, choose from the loan amounts presented to you at either a 3- or 5-year term.
- Provide details so Prosper can verify your identity. 2048-bit encryption protects the personal information you share.
- Once the process is completed, the funds from the loan will be deposited into your bank account within 48 hours.
The funds are made possible because of investors that invest in personal loans. Investors should review Prosper thoroughly to determine if the estimated 6.84% return is ideal and if Prosper will add to the diversity of their investment portfolio.
Prosper offers personal loans from $2,000 to $40,000 with an interest rate of 6.95 - 35.99%.
The origination fee for the loans is from 2.41 - 5% of the loan amount.
Every loan application is given a Prosper Rating. This is a proprietary system that allows Prosper to give consistent risk ratings to investors. Rates are adjusted based on the Prosper Rating.
For example, a three-year $10,000 loan with a Prosper Rating of AA would have an interest rate of 5.31% and a 2.41% origination fee for an annual percentage rate (APR) of 6.95% APR. You would receive $9,759 and make 36 scheduled monthly payments of $301.10. A five-year $10,000 loan with a Prosper Rating of A would have an interest rate of 8.39% and a 5.00% origination fee with a 10.59% APR. You would receive $9,500 and make 60 scheduled monthly payments of $204.64. Origination fees vary between 2.41%-5%.
Prosper Loans Have Many Uses
Prosper loans can be used for all types of purposes, including:
- Debt consolidation
- Home improvement
- Adoption
- Auto and vehicle
- Small business
- Special occasion
These loans are funded by investors all around the world that receive a return as the loans are paid back by the borrowers. That’s the premise of peer-to-peer lending, which is why it works so well.
If you’re looking for a relatively fast and easy loan with a low rate, Prosper could be a good option.
Investing with Prosper
As stated before, Prosper uses peer-to-peer lending for loans. This means that every loan has investors behind it. This gives investors a chance to diversify their portfolio.
How it works
- Open an account with Prosper. There are two types of accounts:
- General Investment Accounts: Taxable growth & withdraw at anytime
- Individual Retirement Account (IRA): tax-deferred growth and long-term investment
- Browse and compare loans by credit score, rating, a term.
- Invest in loans. You can choose to manually invest in specific loans or use the Auto-Invest tool to create specific criteria for your money to be automatically invested.
- Earn returns. Your earnings are automatically deposited into your account.
Things To Know
- There is a minimum of $25 required for each loan investment.
- Returns historically average 5.5%.
- The average borrower has a 710 FICO score.
- The average annual income of a Prosper borrower is over $95k.
Whether you are looking to borrow or invest money, Prosper is a promising option. With great rates on both ends and a quick and easy application process, Prosper may be your next destination for both investment and loans.
