Prosper Versus Lending Club
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- The Good
- Easy to use
- Fast deposit
- Partial loans available
- The Bad
- Higher interest rates
- Good credit score needed
Prosper is a peer-to-peer lending company that offers competitively priced personal loans to an array of professionals. Vastly different from the majority of the best online loan companies, Prosper caters to those with high credit scores and income. Unlike many lenders, the goal of Prosper is to offer services and resources to those who may need a bit of a push to help them achieve financial freedom.
Other Loan Reviews
- The Good
- Easy to use
- Average credit welcome
- Partial loans available
- The Bad
- Customer service can be a bit slow
Lending Club is the gold standard in the best online loans. It was one of the first online companies to offer peer lending services. The company opened in 2006 to give people access to a wide range of loans, including personal, business and student loans. Check out our Upstart vs. Lending Club comparison to see how Lending Club stacks up to another top-rated loan service, Upstart Loans.
Other Loan Reviews
- APR
- 5.99% to 36%
- Origination Fee
- 1% to 5%
Just like any lender, Prosper’s rates fluctuate depending on your credit and other factors that it uses to determine your eligibility for a loan. The APR ranges between 6.73 percent and 35.97 percent. There is also an origination fee, which ranges between 1 percent and 5 percent. Prosper’s late fee is $15 or 5 percent, whichever is greater, and the check-processing fee is $15.
- APR
- 5.99% to 32.99%
- Origination Fee
- 0.99% to 5.99%
Just like any lender, Lending Club’s rates fluctuate depending on your credit and other factors that it uses to determine your eligibility for a loan. The APR ranges between 5.99 percent and 32.99 percent. There is also an origination fee, which ranges between 0.99 percent and 5.99 percent. Lending Club’s late fee is $15 or 5 percent, whichever is greater, and the check-processing fee is $15.
- Minimum
- $35,000
- Maximum
- $2,000
The maximum loan amount for Prosper is $35,000, which is in line with most other online loan providers, while the minimum loan amount is $2,000, which is not the lowest minimum among online person loan providers, but still makes Prosper a good option for those who are just looking for a quick, low-cost loan.
- Maximum
- $40,000
- Minimum
- $1,000
The maximum loan amount for Lending Club is $40,000, which is in line with most other online loan providers, while the minimum loan amount is $1,000, which is the lowest minimum among online personal loan providers, which makes it a good option for those who are looking for a quick, low-cost loan.
- Qualifications
- Good to excellent credit
- Proof of income
- Low debt-to-income ratio
- Must be at least 18 years old
Unlike some other online loan services we review, you need at least a good credit score (instead of average), proof of income and a low (30 percent or below) debt-to-income ratio to get approved for a loan by Prosper. If you are looking for a service that offers more flexibility when it comes to qualifications, you can check our our Upstart loan review here.
- Qualifications
- Average to excellent credit
- Proof of income
- Low debt-to-income ratio
- Must be at least 18 years old
Like traditional loans, you need certain qualifications to get approved. Lending Club looks for an average credit score or above, along with proof of income and a low debt-to-income ratio. You must also be 18 to apply.
- Loan Process
- Application > Loan Offers > Application Review > Investors Fund Loan > Loan Approval
Prosper’s loan process starts with a basic application that asks for simple personal and financial information. Prosper then processes your application and assigns you a rating that will help determine your interest rate. You can then list your loan request, where you can add personal information about who you are and why you want the loan. Individual investors, who Prosper screens, will have 14 days to invest in your loan. If your loan is fully funded by the end of the 14 days, the funds will be transferred to your account within the next day.
- Loan Process
- Application > Loan Offers > Application Review > Investors Fund Loan > Loan Approval
Lending Club, since it is a peer-to-peer lending service, has a slightly more complicated application process. First, you fill out an application that includes personal and financial information. You are then assigned a “grade” that will determine your interest rate and tell investors how desirable you are as a borrower. You will be presented with multiple loan offers, and you can choose one or decide to cancel your application. Once you pick a loan offer, your application will be reviewed and approved, and then presented to individual investors (who are screened by Lending Club.) Investors have one to two weeks to decide whether to fund your loan. If your loan is fully funded, it is deposited into your account within four business days.
- Partial Loans
- Yes
Prosper does offer partial loans. If your loan is at least 70 percent funded before the 14 days are up, you can choose to take the 70 percent of your loan or cancel the loan and apply again.
- Partial Loans
- Yes
Yes, Lending Club offers partial loans. If investors commit to at least 60 percent of your loan, you can decide to accept the partial amount or turn it down and apply for a new loan.
Prosper: User Reviews
Lending Club: User Reviews
Prosper: Comments
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Prosper was one of the first peer-to-peer lending services, along with Lending Club, and one of the few originals to still be thriving. Peer-to-peer lending just means that ordinary people are not just the ones borrowing from Prosper, they are also the ones who fund the loans through investments. Basically, anyone can sign up to invest (after being approved by Prosper) and can choose to fully or partially fund any loan application that comes in.
How Does Prosper Work
Prosper works very similarly to Lending Club. You fill out an application online with personal and financial information. Once you submit that application, Prosper will assign your request a ranking that will help determine your interest rate. You then can specify your loan requirements, and include any other pertinent information that you think can help you get approved. Prosper then sends loan details to its investors, who have 14 days to decide whether to fund the loan.
Investors can decide whether to fund a portion of the loan or the whole thing. Multiple investors can contribute to one loan. Once your loan is funded, your funds will be in your bank account by the next business day.
If your loan is not fully funded but is funded up to 70 percent of the original amount, Prosper will allow you to approve a partial loan for that amount, although the decision to take it or not is up to you. You can also cancel the partial loan and apply elsewhere for the full loan amount.
What Sets Prosper Apart
The first thing that sets Prosper apart from other online loan services is not necessarily a plus. Prosper has pretty high standards when it comes to who it is lending money to. Generally, people applying for a loan must have a good credit score, a pretty solid income and a very low debt-to-income ratio. The payoff for this is lower interest rates in general, but Prosper isn’t the best online loan service for someone with poor credit. If you need help with raising your credit score, you can look at one of the the best credit repair companies to help you out, or check out our review of the top two services, Sky Blue Credit Repair compared to Lexington Law.
In addition, Prosper offers partial loans, which is common for peer-to-peer lending services. If investors only decide to fund a portion of your loan request, and the total is 70 percent or more of your total loan request, Prosper will offer you a partial loan instead, which you can accept, or cancel and try applying again.
Another plus for Prosper is its financial tracking app. The company offers an app that you can use to track your finances and keep an eye on your spending. The app also will alert you if you have bills or subscriptions that you don’t need, so you can cancel and save money.
Like most other online loan services, Prosper offers both three-year and five-year loans. Terms of repayment are laid out in the loan agreement you sign.
Common Prosper Reviews
Generally, Prosper does well in professional consumer product reviews, usually getting at least four out of five stars. It’s no surprise, since Prosper has reasonable rates, proper funding and offers partial loans and financial education tools. The one downside most professional reviewers found was Prosper’s high standards when it comes to approving borrowers.
Customer reviews for Prosper are very similar. The company ranks 4.5 out of five stars on Credit Karma, with more than 300 Prosper customers leaving reviews. Most positive reviews talk about how fast and easy the service is, as well as how Prosper approved them when other banks had denied their loan request. Customers also seemed to like the payment process.
Negative reviews seem to focus on early repayment of loans. Although Prosper doesn’t charge an early payment fee, many consumers have apparently had problems with trying to pay back their loan early. Other negative reviews talk about the origination fee and high interest rates.
Is Prosper Right For You?
In a sea of stellar online loan services, Prosper can seem like the forgotten middle child of the family, but it actually has some great features that set it apart. Here are the questions to ask yourself when considering Prosper:
- Do I have good credit?
- Do I need the full amount of my loan?
- Do I need help staying on top of my finances?
- Do I have time to wait for the money?
Let’s be honest, Prosper requires a pretty good financial history in order to get approved for a loan. This can make it difficult for people with average or poor credit to be approved for even a partial loan. If you have average credit, there are other online loan services included in our reviews that would gladly accept you.
If you are not looking for an exact dollar amount or are OK taking what you can get, Prosper’s partial loan option might be good for you.
This is actually counter-intuitive since Prosper doesn’t usually approve people with money issues, but Prosper’s finance tracking app is a great tool to help you stay on top of your finances and make sure you are not paying for things you don’t need.
Like any peer-to-peer lending site, it is going to take a while to get approved for a loan. Once Prosper sends your loan application out to the investors, the investors have 14 days to decide whether to fund your loan. So if you don’t have more than two weeks to wait, this might not be the best service for you.
Lending Club was once the darling of the online loan world, offering a ground-breaking idea with peer-to-peer lending, where average people could invest in other people’s loans. Since then, several other companies have popped up that utilize the same type of lending, some with new, fresh spins on the practice. This has left Lending Club a little bit behind, however, it is still a great online loan service for those looking for good rates and good service.
How Does Lending Club Work
Lending club is a peer-to-peer lending service, which basically means that ordinary people (who are approved by Lending Club) can invest money to fund your loan. They make money off of the interest you are charged, so it ends up being a win-win.
The first step in getting your loan is filling out an application. Then Lending Club will rank you based on that information so it can determine your interest rate. It also shares that ranking (not your personal information) with its investors when it sends out your loan to be funded. Lending Club will then give you a list of loan offers, and you choose the one that best fits your needs.
Once you’ve selected a loan offer, Lending Club will send the offer details and your ranking to its investors, who can then decide if they want to fully or partially fund your loan. Investors have one to two weeks to decide on funding your loan, so the process can take a while. Once the time is up (or if your loan gets fully funded before the deadline), you will then be presented with the full loan or a partial loan. You then decide to accept or not. If you do, you will see your money deposited in your bank within four business days.
Lending Club offers both three- and five-year loans, and will go over a payment plan with you before you accept the loan.
What Makes Lending Club Stand Out?
The biggest thing is Lending Club’s peer-to-peer lending model. If offers a two-tier business model, in that it can cater to both borrowers and investors. It also keeps Lending Club from having to have a ton of its own cash on hand to fund the loans. It’s also a plus for borrowers because some investors may be more willing to take a risk on people whose credit background is not stellar. If your credit score is not where it needs to be, check out some credit repair reviews to find a credit repair company that works for you. To learn more, check out our reviews of the top credit repair services, Lexington Law compared to Sky Blue.
The other thing that makes Lending Club stand out is its option for partial loans. This is generally something only peer-to-peer lenders do, since there may be more than one investor funding a loan. So, if your loan is 60 percent funded or more, you have the option of taking the partial loan, which is better than just being turned down and ending up with nothing.
Common Lending Club Reviews
Lending Club is pretty well-received in the online loans world, so it’s not much of a surprise that it ranks pretty well among consumer product review sites. For example, NerdWallet gives Lending Club 4.5 out of five stars.
Customers of Lending Club tend to agree. Online customer reviews of Lending Club are generally five stars, with few exceptions. Most of the reviews focus on how quick and easy Lending Club is, since everything is online and accessible with just a click of the mouse. Many customers talked about Lending Club giving them the ability to consolidate their credit card debt, which is a common use of loans from Lending Club.
Negative reviews seem to focus on people who weren’t aware of the origination fee, or felt the interest rates were too high or the process took too long.
Is Lending Club Right For You?
Lending Club does have some unique features that set it apart from other online loan services, which means it can cater to certain needs better than other services. Here are the questions you need to ask yourself when considering Lending Club:
- Do I need money quickly?
- Is my credit score not the best?
- Would I be OK with not getting the full loan?
If you are having a financial emergency and need a loan quickly, Lending Club is probably not the best place to look. Since it is a peer-to-peer lending service, it relies on individual investors to fund each loan. Once you finish your loan application, Lending Club has to send your loan details to all its investors and wait for people to fund your loan, which can take up to a week.
If, however, you can wait and you don’t have the best credit score, Lending Club is a good choice. Since it offers loans to individual investors, it is up to the investors to decide if they want to take a risk on someone with lower credit. There are investors who are willing to take that risk, meaning it might be easier to get a loan through Lending Club than traditional loan services.
Another thing to consider is the fact that Lending Club offers partial loans. If you don’t need the full loan amount, and your credit is not the best, getting approved for a partial loan is better than being turned down altogether. If, however, you have really strong credit, you will probably end up getting approved for the full amount anyway. If you aren’t, you can probably easily get a loan through another online loan service.
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