Prosper was founded in 2005 as the first peer-to-peer lending marketplace in the U.S. and has arranged more than $17 billion in loans to over one million people since. Its position among the best debt consolidation companies is secured as a result of a personal loan offering that allows borrowers to bring their existing credit card and high rate loan debt together into one manageable monthly payment. The responsibility still lies with you to use the loan to clear the debts that you owe, but the incentive of taking back control of your finances awaits.
As well as providing a way to get on top of your debt, a debt consolidation loan from Prosper could help rebuild your credit score if it has faltered, or improve the rating that you have. Alongside its debt consolidation proposition, Prosper also ranks highly among the best online personal loans and offers home equity line of credit (HELOC) too.
Prosper Debt Consolidation review: Eligibility
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- Clear eligibility criteria
- Co-applications are allowed
To be eligible for a debt consolidation loan with Prosper you will need to be at least 18 years of age and a U.S. resident in a state where loans through its marketplace are available. You will also need a U.S. bank account and a Social Security number.
Prosper is also upfront about the minimum eligibility criteria it requires of all borrowers. If you want to be considered for a loan, you will need a FICO 08 score of at least 640, fewer than five credit bureau inquiries within the last six months, an annual income greater than $0, a debt-to-income ratio of no more than 50%, at least three open trades reported on your credit report, and not to have filed for bankruptcy within the last 12 months. That said, if you want the best rates, your circumstances will likely need to be much more favorable than these minimum requirements, and there are no guarantees meeting this criteria will be good enough to secure you a loan either. In order to check your eligibility, you must use the Check Your Rate tool on the website.
For joint applications, the primary borrower must satisfy the above criteria (except for the debt-to-income ratio, which is calculated using the combined ratio of both borrowers), but the secondary borrower needs the slightly less strict minimum FICO score of at least 600, at least one open trade reported on their credit report, and no bankruptcy filings within the last 12 months.
Prosper Debt Consolidation review: Application process
Loan amounts: $2,000 - $40,000
APR: 7.95% - 35.99% fixed
Loan terms: choice of 36 or 60 months
Fees: Origination fee of 2.4%-5%, others too. No prepayment fee.
- Apply online or over the phone
- Upload or email documents
As with most online lenders, Prosper aims to give borrowers the loan information that they require in a matter of clicks. The Check Your Rate feature is the precursor to the application proper that will give you an indication of whether you qualify for a loan, and then the essential details of the type of loan you might get. Once you’ve completed the basic information that is required, you should get an answer within minutes. This part of the process involves a soft credit check, so your credit rating won’t be affected; it is only once you are approved for a loan that a hard inquiry will be made that will leave an imprint.
Prosper is set up so that you can quickly and easily apply online. You can also apply for an individual loan over the phone, but it’s not yet possible to submit a joint loan application by phone.
Before Prosper will fund your loan, it will review your application, verify your statements (and those of any co-applicant), and might request additional supporting documents. Any documents that are required must be either uploaded to your Prosper account or sent as an attachment to an email. They may also call your bank or employer to help with verification.
Investors have a window of 14 days in which to invest in your loan - if your loan does not receive at least 70% funding within that time, your application will be declined. However, Prosper says investors usually commit to full funding within 1-3 days, and once you’ve been approved, it may take 1-3 business days to receive funds in your bank account.
Prosper Debt Consolidation review: Essential details
- Relatively low maximum loan amount
- Quite a few fees
A debt consolidation loan through Prosper can be for between $2,000 and $40,000. While not the smallest maximum amount available on the market, there are other lenders, such as LightStream, who allow loans of up to $100,000. Choice is also limited in respect of the loan periods on offer, with borrowers having the option of either a three- or five-year term. Most other lenders allow for a wider range, with Wells Fargo, for instance, offering terms from 12 to 84 months, including various points in between.
All rates are fixed, meaning you will always know what your monthly payment will be, with the APRs typically available through Prosper ranging from 7.95% to 35.99% - the lowest rates are obviously reserved for the most creditworthy borrowers.
Importantly, Prosper charges a one-time, non-refundable fee to process your loan. This origination fee of between 2.4%-5% is calculated as a percentage of the amount you borrow, and depends on the rating Prosper applies to you. As it is automatically deducted from your loan proceeds before your money is transferred, this means that you will actually receive the amount you requested minus the origination fee, so make sure you ask for enough to cover both the specific amount you need to cover your debt and the origination fee.
While there is no fee for making prepayments or paying your loan off early, late fees may apply if you are 15 days overdue with a payment - these will be for the greater of $15.00 or 5% of the unpaid monthly payment amount. An insufficient funds charge of $15 is also possible if you don’t have enough money in your account, while if you prefer to pay by check, a processing charge is applied of the lesser of 5% of your payment or $5 - if your payment is greater than $100, you should always add $5.
Prosper Debt Consolidation review: Features
Prosper offers the option to make your monthly payments in a variety of ways: by enrolling in AutoPay, by signing into your account online, by contacting customer service, or by mailing a check. AutoPay is a “set and forget” feature that will see your payment taken automatically from your bank account each month. It is also free, so should be considered the preferred option above making payments by check, which will incur a processing charge.
Prosper Loans Debt Consolidation review: Service
- Online management, plus phone support
- Resources could be better laid out
When it comes to managing your loan account, everything can be done online 24/7, or you have the option of contacting Prosper by phone, Monday to Friday, 5am to 6pm PT.
Before you are approved, you can easily check the status of your application anytime by logging into your Prosper account through a desktop computer, or via your phone or tablet. You will then be able to check whether any documents are outstanding as well as the percentage of funds committed by investors. Once you have a loan, you can then sign in to find your loan details, review your payments and change the bank account from where your payments are taken, among other options.
As is the norm with online lenders, the website includes basic information regarding how debt consolidation works, getting a loan, and so on. That said, there certainly isn't an abundance of material, and the blog, where some additional articles can be found, could be better signposted. There is also a Help Center which aims to answer questions more specific to Prosper’s loan arrangements, although this could definitely benefit from some categorization - at present, all 76 articles are listed consecutively and solely under the heading of “Personal Loans”.
Should you use Prosper Debt Consolidation?
Prosper offers all the options you would expect of an online debt consolidation company, including an easy-to-follow application process and accessible ongoing support. That said, as a peer-to-peer lender, there may be a few extra hoops to go through to get a loan, and it may take a few days before the money lands in your account.
A wider range of loan options can be found elsewhere, and there are a number of charges that should be taken into account too. However, to its credit, everything is clear with Prosper, from its eligibility requirements through to its fees, making it a debt consolidation option where you should always know where you stand.