Prosper Funding LLC is a peer-to-peer, nontraditional lending option for unsecured personal loans ranging from $2,000 to $35,000 with three-year or five-year terms. The loans are nontraditional in the sense that you deal with private investors instead of banks and finance companies. All loan transactions take place over the Internet, and as of 2015 are available in every state except Iowa, Maine and North Dakota.
In addition to residing in a state where the company conducts business, you must also be a legal U.S. resident and have a bank account and a Social Security number.
You'll also need an Experian FICO credit score of at least 640 points to qualify. Since FICO scores change frequently, it can be helpful to purchase your FICO scores from on or all of the three largest credit bureaus before applying. Once you know your score, the website's home page has a tool that can estimate what your interest rate will be before you apply.
As an alternate option, get a free copy of your Experian credit report from the Annual Credit Report website. However, the free credit report does not include a FICO credit score. If you choose this option, you’ll need to review the report and make an educated guess about your FICO score range.
How the Loan Process Works
The process starts when you create a loan listing. The listing tells potential investors who you are, how much you want to borrow and for how long.
Each listing goes through a three-stage verification process that both you and potential investors can see and monitor. During this time, Prosper verifies the information you provided and assigns your listing a rating based on its level of credit risk. Each rating has an associated interest rate that potential investors use in making funding decisions. For example, a first-time borrower with an A rating can expect an annual percentage rate of 10.28 percent to 13.27 percent for a three-year loan.
An investor can choose to fund a percentage or the full amount you requested. Once the listing becomes 70 percent funded, you can choose to accept the loan or wait to see if it becomes fully funded.
During the loan repayment phase, you send in one monthly payment, which Prosper distributes to each funding investor.
Monitor your listing as it moves through each verification stage to track progress and submit additional information requests promptly. This will help you complete your loan application faster.
Prosper does not charge a fee for posting a listing but does charge a closing fee that it deducts from the proceeds. Fees range from 1 to 5 percent of the loan, depending on the loan term and your Prosper rating. For example, a three-year A-rate loan has a 4 percent closing fee. For a $10,000 loan, Prosper will deduct $400 and you will get $9,960.