A bank or credit union is not what Prosper is. Using this peer-to-peer lending network, businesses and individuals can invest in loans to borrowers and receive interest on their investments. Prosper assigns each potential loan a letter grade using its evaluation system to aid customers in deciding whether to invest in it.
Its unsecured personal loans can be used for significant expenditures like homes, debt consolidation loans, and other large purchases. Well, in this post, I will be making a review on prosper personal loan.
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Things you should know about Prosper
The followings are things you should consider before choosing a prosper personal loan:
- Low loan minimums
- No minimum income requirement
- Potentially high-interest rates
- Originated, late, and check fees
- Limited repayment terms
Low loan minimums
Prosper offers loans in sums between $2,000 and $40,000, which may be perfect if you only need to borrow a few thousand dollars in an emergency loan to cover a car repair or medical expense. However, you’ll need to work with a different lender if you want a loan with a higher loan amount.
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No minimum income requirement
Although there is no minimum income requirement to be eligible for a Prosper loan, your annual income must be larger than zero. But before you ask for a loan, you should be sure you can make the repayments on schedule. Your credit may be impacted negatively by missed and late payments.
To be eligible for a Prosper loan, you’ll also need to meet other requirements, including having a long credit history. A minimum FICO 8 score of 640, three or more open tradelines on your credit reports, a debt-to-income ratio of no more than 50%, no recent bankruptcies, and no more than five credit agency queries within the preceding six months are all requirements.
Potentially high-interest rates
Interest rates on Prosper loans range from reasonable to exorbitant. You’re more likely to be approved for better rates if you have credit that Prosper considers to be “outstanding.” You have a decreased chance of being approved for its cheaper rates if your credit is weak.
You might want to think about whether acquiring the loan is worthwhile if you can only qualify for Prosper’s highest rates. Investigating a credit-builder loan might make more sense.
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Originated, late, and check fees
A Prosper loan may have several costs. Before you ever receive your money, these costs might start to stack up.
Origination fee: Before a loan is funded, an origination fee of between 2.4 percent and 5 percent is levied on each loan. As a result, if you are granted a loan for $10,000 with a 5% origination fee, you will only receive $9,500.
If your complete monthly payment isn’t paid within 15 days of the due date, you’ll be assessed a late fee of $15 or 5% of the payment total, whichever is higher.
Check processing cost: You will be charged a check processing fee equal to 5% of your payment or $5, whichever is greater if you choose to make your monthly payments by check.
Limited repayment terms
Only three years or five years are available as repayment terms on Prosper. You might want to seek elsewhere if you need greater latitude in how you repay your loan. Of course, with Prosper, you may always pay off your loan early without incurring a prepayment charge if you’re searching for a loan with a shorter duration.
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Who is Prosper Loan good for?
If you want to pay off credit card debt, finish a home improvement project, or cover an unexpected need, a Prosper loan might be the best option for you. However, tertiary education costs cannot be covered by Prosper loans. Additionally, Prosper has a division called Prosper Healthcare Lending that focuses on providing medical loans if you need a loan to pay for a medical procedure.
The best borrowers for Prosper loans are individuals with excellent credit who need small loan amounts due to the origination fees and potentially high-interest rates. If you can commit to a three- or five-year contract, Prosper might be an excellent option.
Prosper is generally not the ideal option if you’re still working on building your credit, need a loan that is higher than $40,000, or need the money right away.
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Pros and cons of Prosper Loan
- Loan amounts starting at $2,000
- No prepayment penalty
- Potentially high-interest rates
- Fees for loan origination, late payments, insufficient funds, and check processing
- Limited loan repayment terms
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Prosper loan is not suitable for everyone, well, depending on your situation and need you should think twice before considering a prosper loan. That is all for this article, where the review of prosper loan is being made. I hope you get a lot from the reading, if so, kindly share with others. Thanks for reading, see you around!