Prosper is an online peer-to-peer (p2p) lending platform that offers loans to individuals at a fairly low-interest rate. Established in 2006, Prosper became the first firm to enter the p2p lending market. It provides loans to individuals with average to excellent credit score. Any individual with a minimum of 640 credit score is considered eligible for a Prosper loan.
How Does Prosper Work?
It must be usual for people to wonder, how Prosper manages to lend money at an interest rate far lower than the industry. The answer is simple. Unlike banks & other financial institution, Prosper doesn’t have branches, operating online helps Prosper saves on the expenses other financial institutes have to bear. These savings help provide relief to their customers as low interest rates.
When an individual applies for a loan on Prosper’s website, they request necessary information of the applicant after which Prosper makes a soft credit check of the borrower’s credit history. This soft credit inquiry doesn’t affect the credit score as it doesn’t reflect on the public credit report. This soft credit check helps Prosper determines whether the individual is eligible for a Prosper loan. Once the applicant has succeeded in the soft credit check, Prosper makes a hard credit check to confirm his eligibility for the loan. This hard credit check reflects on the credit report for the next two years. Get detailed information on hard and soft credit check here. When the applicant’s credit history seems satisfactory, he/she is provided an eligibility confirmation for a Prosper Loan.
On completion of credit check, the applicant receives a confirmation noting the loan has been processed and that the amount will be transferred in 1-4 business days (to eligible applicants). The applicant gets the amount in their provided bank account within the said duration.
What are the charges of Prosper?
Please note that the amount received will not be equivalent to the loan amount applied for, as an origination fee ranging from 2.4% to 5% will be deducted from the amount borrowed. An origination fee is a fee charged by Prosper to process the loan. The origination fee rate depends on the applicant’s credit score, individuals with the excellent score being charged 2.4% while an average scorer would be charged 5%. The better the credit score one has, the lesser the origination fee he has to pay. If you are in need of a particular amount, be sure to calculate the origination fee in advance and add it to the borrowing amount to get the desired amount. For example, if you are in need of $2,000 be sure to request a loan of $2105, as 5% of $2105 is $105, which will give an amount of $2000 after the deduction of origination fee.
How to Apply for a Prosper Loan?
Prosper loan applications are quick and easy. The entire process is done online on Prosper’s official website. Follow the below mentioned steps to apply for a Prosper Loan:
Details requested would be:
Since sensitive information like Social Security Number is requested on their site, Prosper has secured their website with encryption to process information securely.
Once you have completed the above mentioned steps, Prosper will display a confirmation stating –
Benefits of Prosper Loans
Prosper is not only the quickest and easiest way to apply for a loan, but also have additional benefits:
Drawbacks of Prosper Loans
Although there don’t seem to be many drawbacks of Prosper loans, we have mentioned below a few things that might be inconvenient for some:
The best situation will be not to have to borrow money or take any loan, in case you must, Prosper Loans are a good choice with low-interest rates and easy repayment options.