In the past, applying for a personal loan was usually a tedious process that involved visiting the bank and submitting various requirements in order to qualify. Approval could take days and even weeks if you’re unlucky.
With technological advancements, financial institutions have designed systems to enable clients like me to apply for loans online. Now, I can even check if I would be approved and at what interest rate prior to applying.
In this article, I will talk about one of these online personal loans available online, namely the personal loans available through Prosper Bank. I will discuss the features of these online loans, associated rates and fees, and the process of applying.
- Get to Know Prosper as a Company
- A Look at the Prosper Personal Loans
- Qualifications Needed for a Prosper Personal Loan
- Interest Rates and Fees Imposed on Prosper Personal Loans
- Applying for a Prosper Personal Loan
- The Prosper Personal Loans App for Android Devices
- The Prosper Personal Loans App for iOS Devices
Get to Know Prosper as a Company
Before delving into the details of Prosper’s online loans, it’s worth learning more about Prosper as a company to understand its popularity and credibility in the lending marketplace. Prosper is not your typical financial institution.
Unlike banks and traditional lending companies that directly lend money to borrowers, Prosper serves as a facilitator between people who are looking to borrow money and those who are willing to invest into those loans.
The company was founded in 2005 and became the first peer-to-peer lending marketplace in the U.S.
Since its establishment, Prosper has handled over $20 billion in loans to more than one million people.
How Prosper Does Business
As a peer-to-peer lending marketplace, Prosper enables borrowers to apply online for fixed-rate, fixed-term loans while individuals or institutions could invest in these loans to earn great attractive returns.
Potential investors are able to look at the borrower’s credit scores, ratings, and history, as well as the loan category, before making a decision to finance the loan. Prosper will conduct the verification of the borrower’s identity before funding the loan.
I find the service unique because, as a marketplace, Prosper is only responsible for handling the servicing of the loan and the collection and distribution of the borrower payments and interest to the loan investors.
A Look at the Prosper Personal Loans
Borrowers using the Prosper lending platform are able to access personal loans from $2,000 to $40,000. These loans are backed by investment companies, such as Sequoia Capital, Institutional Venture Partners, and Francisco Partners.
Unlike other lenders and financial institutions that require a good credit score to be qualified for personal loans, Prosper only needs at least a 640 FICO credit score. Interest rates are determined based on credit score.
Joint applications are also allowed to enable clients to apply for a loan with a co-borrower.
This can potentially help in qualifying for the loan and lowering the interest rate if the co-borrower has a high credit score.
Other Features of the Prosper Personal Loans
Borrowers may choose loan terms of between three or five years. It can be used for a variety of purposes, including debt consolidation, home improvements, and vehicle purchases.
Another great feature I like is that loans are released as fast as one business day after requirements are fulfilled. You just need to qualify and accept the loan offer, and funds will be deposited the next business day.
An additional perk Prosper borrowers can enjoy is the ability to change the payment date once every 365 days. This is a very useful feature if you’re trying to manage your payments in relation to your income stream.
Qualifications Needed for a Prosper Personal Loan
Aside from the required credit score of at least 640, the debt-to-income ratio of a borrower should not exceed 50%. This means that borrowers should have less than five credit bureau inquiries within the last six months.
While Prosper does not impose a minimum income requirement, personal loan applicants still need to have some form of income.
People who have filed for bankruptcy within the last 12 months are automatically disqualified.
I also learned that since the loans are investor-driven, eligibility will also be dependent on the number of investors who are willing to commit funds to the borrower’s loan account.
About the Pre-qualification Option
In order to get estimates of the interest rate and terms you qualify for, you can perform the platform’s soft credit inquiry, and you will have a better idea in a matter of minutes.
You only need to enter the amount you plan to borrow and click the “Check Your Rate” button. You will then be asked to enter your personal information to begin running the check.
This is a feature that I always look for in a lender because getting an overview of possible rates and terms allows me to weigh my options better. And since it doesn’t affect my credit score, I don’t have to worry.
Interest Rates and Fees Imposed on Prosper Personal Loans
I mentioned earlier that the interest rates for the personal loans on Prosper depend on the assessment of the borrower’s creditworthiness. The annual percentage rate (APR) ranges from as low as 7.95% to as high as 35.99%.
For all Prosper loans, borrowers are required to pay origination fees of between 2.41% and 5% of the loan amount. This will also depend on the loan term and the borrower’s creditworthiness.
Origination fees are used to cover certain costs, including administrative activities, processing of the loan application, and marketing in certain cases.
Other Costs to Consider
If borrowers make a payment more than 15 days after their due date, Prosper will charge the borrower late fees equivalent to 5% of the monthly loan payment amount or at least $15, whichever is higher.
To me, a grace period of 15 days after a payment due date is a generous gesture from Prosper. The company also does not charge any prepayment penalty fees if loan holders want to pay off their balance before the loan term ends.
Prosper may also charge other additional fees to borrowers where applicable, including an insufficient funds fee of $15 and a payment by mail fee of $5.
Applying for a Prosper Personal Loan
As I discussed earlier, borrowers may begin the loan process by doing a soft credit check on the Prosper platform. After receiving the loan terms, they can decide whether to accept or reject them.
If you accept the terms of the loan, the next step is to submit the required documents for verifying your identity. You can log into the platform to check your uploaded documents’ status.
Once all documents have been submitted, expect to receive a response in as fast as two to three days. Once you verify the details and accept the offer, you may receive the funds between one to three business days.
Company Contact Information
If you have any inquiries or concerns, you may contact Prosper via a variety of channels. You may email the company at [email protected].
You may also call the Borrower Service hotline at 1-(866) 615-6319, Monday to Friday from 9:00 A.M. to 8:00 P.M. ET or 6:00 A.M. to 5:00 P.M. PT.
The company’s headquarters is located at 221 Main Street, Suite 300, San Francisco, CA 94105.
The Prosper Personal Loans App for Android Devices
Aside from the Prosper website, you will be able to apply for a loan or manage an existing personal loan using the Prosper Personal Loans app. It is available to both Android and iOS device owners.
For Android users, the app can be found on the Google Play Store in the Finance category under the name “Prosper: Personal Loans”.
To download the app, tap on the Install button and wait for it to finish.
Once all files are downloaded, the app will automatically begin installing on your Android device.
Downloading and Installing the Android App
The Prosper Personal Loans app has a file size of 9.2 MB and will require your device to run on Android 6.0 and up in order to function properly.
It is currently on version 1.0.0 and was last updated on December 17, 2021.
The Prosper Personal Loans App for iOS Devices
Meanwhile, iOS device users will find the Prosper Personal Loans app on the Apple App Store in the Finance category also under the name “Prosper: Personal Loans”.
To download the app, tap on the Get button and wait for it to finish.
Once the process is complete, the installation will automatically begin on your iOS device.
Downloading and Installing the iOS App
This version of the app has a bigger file size compared with its Android counterpart, needing 15.6 MB of storage space.
It requires iOS 14.0 or later to work on both the iPhone and the iPod touch.
The Bottom Line
The online personal loans available through Prosper Bank are a great option for people with a decent credit score who are looking for a relatively small loan. The fixed-rate, fixed-term loans can be competitive with other mainstream lending options if used correctly.
Note: There are risks involved when applying for and using credit cards. Consult the bank’s terms and conditions page for more information.