All You Need to Know Before Using Prosper.com
If you are searching for prosper reviews, you are probably in the market for a personal loan and are trying to make sense of all of your options. You’ve probably already spent some time reading reviews and have perhaps even come across prosper.com reviews which are vague and don’t give enough information.
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With this article, AdvisoryHQ News is presenting a detailed Prosper.com review, including what it takes to get a loan from this unique financial institution, and what you should consider if you are interested in investing in Prosper consumer loans.
Overview of the Prosper Marketplace (Prosper Loans Reviews)
Prosper.com, a subsidiary of Prosper Marketplace Inc., emerged in 2006 as the first peer-to-peer lending marketplace of its kind in America. It touts its business model which allows people to “invest in each other in a way that is financially and socially rewarding.”
What this exciting new approach offers, that most traditional lenders don’t, is the ability for borrowers and investors alike to “skip the middle-man” and finance unsecured loans through individual investors. Up until now, if you needed a loan, you either borrowed it from someone you knew or applied for a loan from a traditional bank.
Since Prosper first unveiled its approach, it has funded over $5 billion in loans through over 2 million members, and the numbers are on a steady rise. It faces competition from newer peer-to-peer companies, such as Lending Club and Upstart, but manages to stay right up there as a top company. In fact, as you will see in this review, that some of Prosper’s features are far superior to its competition.
What Does This Mean for You?
As a borrower, you can request a loan anywhere from $2,000–$35,000, depending on a few factors. Your credit score, along with your Prosper Rating, is used to determine your qualification for a loan.
Your funding is then backed by individual investors who have the money and desire to invest in the marketplace. You receive your loan, and as you make payments on your loan every month, your investor gets a portion of this payment deposited directly to his/her account. There are risks involved on both sides, but Prosper provides the servicing of the loan for you, the borrower, and also for the investor and acts as a medium for all of this to happen. It is an exceptionally unique approach to lending and investing that has gained popularity in the business.
Note that Prosper does not extend services in Iowa, Maine, and North Dakota.
Who Qualifies for a Loan?
While there are many advantages to getting a Prosper loan, not everyone will qualify. If you know that you have poor credit, you may want to either spend some time improving your credit score or choose a different source for your financing needs. It’s always worth a shot, but don’t expect to get a good rate if your score is below 660, and if it’s below 640, you may not even want to apply.
With that said, if you do have a credit score above 660, Prosper may be just right for you. The higher your score, the lower your interest rate will be.
Your Prosper Rating
Prosper looks at a number of factors based on each individual loan to determine your Prosper Rating, a tool it uses to rate your risk to the company and the chances of your loan going “bad.” The rating system is, in a way, its own version of a FICO credit score. While it looks at this number too, Prosper uses other information, such as your previous Prosper loans, to figure out your rating. Many people like this clear-cut way of knowing how they fit into the picture.
Having good credit and a history of successful, on-time payments on your loans through Prosper and prior to Prosper can help you achieve a higher Prosper Rating.
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Personal Loan Types
Once you know where you fall in regard to your credit score and your Prosper Rating, it’s time to review what types of Prosper personal loans are offered. Prosper actually has a variety of loans that can be used for just about anything. These loans include:
- Debt consolidation
- Home improvement
- Business loans
- Auto loans
- Short-term and bridge loans
- Green loans
- Special occasion loans
- Engagement loans
- Military loans
- Medical bills
Upon filling out your application, you will be asked what type of loan you are seeking and why. Don’t let this frighten you; it’s simply a security measure for both Prosper and your potential investor to know where the money is going. Don’t assume that just because you want to take out a loan for a vacation that you will automatically be denied. The more honest information you give, the faster and more streamlined the whole loan process can be.
Prosper offers convenient 3- and 5-year loan terms, and the origination fee varies depending on the term and your Prosper Rating.
Additionally, if you have a Prosper Rating of AA (the highest there is), then you may choose a 3-year term on bigger loans and save yourself some money. This is a nice feature that not all lenders offer.
Annual Percentage Rate
With all of these numbers to think about, we still haven’t covered what you can expect for an annual percentage rate, or APR. If you have good credit, Prosper offers some of the lowest APRs in the business. As an AA-rated member, you can get an APR as low as 5.99%, but if your credit is dwindling into the 600s, you can be faced with some astronomical rates (think nearly 36%).
As you can see, the loan terms and the number of loans you’ve financed through Prosper can also sway your number in a higher or lower direction in the interest department.
A Review of Prosper’s Security
Your security, especially when dealing with an online source, is crucial. Prosper employs a host of tactics to keep your information – and your money – safe.
This is what it offers:
- Expert fraud prevention: Prosper employs its own team of experts who know exactly how to detect fraud at the first sign. They work around the clock to provide you with peace of mind in all of your transactions.
- 100% identity theft guarantee: If, for any reason, a borrower is the victim of identity fraud, Prosper will purchase the loan for the unpaid principal amount, and the borrower will be under no further obligation to repay the loan.
- Secure data and encrypted sessions: You can make transactions worry-free because Prosper uses state-of-the-art security centers and encrypted data on all of its web pages to provide you with the highest level of protection.
- BillGuard: With a press release just months ago, Prosper speaks of its whimsical union with BillGuard. BillGuard is one of the fastest-growing personal finance security and productivity companies today. This new partnership between the two successful companies means improved security for all Prosper transactions.
Becoming an Investor
Prosper’s approach to the financial market allows individuals – even those who have previously sought out personal loans through Prosper or another source – to invest as little as $25 and see a profitable return. There are absolute risks that need to be accounted for, but if done correctly, you can use Prosper to yield high returns by funding loans for borrowers across the country.
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Before you invest any of your money into any type of project, you need to think about the risks involved and if you can afford to take those risks.
The risk comes in when the borrower for the particular loan you’ve chosen does not make his/her payments. If the borrower doesn’t pay on his/her loan, you don’t get any money. Given that Prosper has a higher-than-average credit score qualification than its competitors, your chances of a successful borrower-lender relationship are higher, but the risk still stands.
As long as you invest wisely, do your research, and are prepared to make adjustments in case of a loss, becoming an investor on Prosper has the potential to become lucrative and exciting.
A Final Review
When you find yourself in a situation where you want or need a personal loan, Prosper has a proven track record of connecting borrowers with investors for a mutually beneficial relationship. It has made millions of deals, with billions in revenue, and continues to grow every day!
For those with a credit score of at least 640, this is definitely an avenue to be considered. Prosper offers some of the lowest interest rates available for peer-to-peer lending markets which further saves you money.
The entire loan process typically takes 3–5 business days, but this depends largely on a few different factors such as your verification documents and banking information.
One of the drawbacks to using a service such as Prosper is that you do not have the option of face-to-face communication, and there are still some people out there who prefer to do their business in person. If this sounds like you, you may not want to finance your loan through Prosper, as it does not have any physical branch locations for you to visit.
However, in today’s technological world, walking into an office may not be what sways your decision. In this case, Prosper is right at your fingertips with a great opportunity to get a loan or invest in a borrower yourself.
For your financial needs, keep it right at the top of your list.
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