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Before You Borrow at Prosper.com

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Prosper.com is a social lending site. Instead of borrowing from a bank, you can borrow money from other individuals. One or more people may offer to loan you money, and they may even compete with each other to get you a better rate.

What is Prosper.com?

Prosper.com is a website where borrowers and lenders meet. The vision for Prosper.com was "an eBay for loans". Instead of having to borrow at whatever rate is available from mainstream institutions, you can try your luck with individuals who visit the site.

How Do You Get a Loan?

To get a loan, you create an account along with a listing for your desired loan. You tell everybody how much you'd like to borrow, and you let them know what you intend to use the funds for. You also pick a maximum interest rate that you are willing to pay.

Who Funds the Loan?

Your loan may be funded by one or more individuals. Many lenders choose to spread their risk by offering small loans to multiple borrowers. They prefer not to fund your entire loan (just in case), but they will help out. In many cases, you won't know who the lenders are. You can see their screen name, but you'll have little or no interaction with them.

If you already have a lender and just want structure for a loan, try Virgin Money

How Do I Qualify for a Loan?

You may or may not get a loan. When you ask for a loan, Prosper.com gathers some information about you. They will check your credit and verify your identity. Lenders see a "credit grade" (along with some other information) that helps them decide whether or not to lend to you. If you have a poor credit grade, it will be harder to get a loan - or you may need to pay a higher interest rate.

To apply for a loan you need a credit score of at least 640.

How Do I Repay My Prosper.com Loan?

You repay your loan directly through Prosper.com. Prosper.com will automatically debit your bank account each month. Loans are repaid over one, three, or five years. However, there are no prepayment penalties - so you can eliminate the loan whenever you want.

What's the Interest Rate?

As with most loans, you repay principal and interest over time (it's a straight line amortizing loan for 3 years). The rate you pay depends on how low lenders want to go. If you allow your listing to stay open for a period of time after it's funded, lenders can bid down your rate and save you some money.

More on Peer to Peer Lending

Return to the Peer to Peer Lending Overview.

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