LendingClub Vs Prosper: How They Compare for Personal Loans
With an ever-growing number of online lenders flooding today’s marketplace, it can be easy for hopeful borrowers to feel overwhelmed by their options. Fortunately, two of today’s leading lending platforms offer exceptional rates on loans for well-qualified applicants.
LendingClub and Prosper are two of the most well-established peer-to-peer lenders in the industry. But what makes them so popular? And why have so many borrowers flocked to these two lenders in particular instead of the innumerable other companies like LendingClub and Prosper?
If you’re shopping around for your best options, Prosper or LendingClub might very well meet your needs to a T. But not all scenarios are the same, so which one is better for your specific situation? You’ll have a pretty good idea by the time you finish reading this comprehensive overview of LendingClub vs Prosper.
Rates, Terms, and Fees
No comparison of LendingClub vs Prosper for borrowers would be complete without an overview of their respective rates, terms, and fees. To help you understand how these two lenders compare, here’s a breakdown of their basic features.
LendingClub Comparison
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| Loan limits: | $1,000–$40,000 |
| Interest rates (APR): | 6.95%–35.89% |
| Origination fee: | 1%–6% |
| Repayment terms: | 3–5 years |
| Minimum credit score: | 660 |
| Minimum length of credit history: | 3 years |
| Maximum credit utilization: | 40% |
| Payment date flexibility: | Yes |
| Prepayment fees: | No |
| Check processing fee: | $7 |
| Joint applications accepted: | Yes |
| Late-payment fee: | The greater of $15 or 15% of the missed payment |
| Click "Check Rates" to apply to LendingClub | |
Prosper Comparison
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| Loan limits: | $2,000–$35,000 |
| Interest rates (APR): | 7.95%–35.99% |
| Origination fee: | 2.41%–5% |
| Repayment terms: | 3–5 years |
| Minimum credit score: | 640 |
| Minimum length of credit history: | No explicit length |
| Maximum credit utilization: | 50% |
| Payment date flexibility: | No |
| Prepayment fees: | No |
| Check processing fee: | $5 |
| Late-payment fee: | The greater of $15 or 15% of the missed payment |
| Click "Check Rates" to apply to Prosper | |
» MORE: Loans For Debt Consolidation
Perhaps now you can see why these two lenders are so popular, especially among people seeking to consolidate outstanding debt. The loan limits of $40,000 paired with very reasonable interest rates appeal to many consumers who are tired of facing a continuous stream of credit card bills.
Why You Might Need LendingClub
So why might someone opt for LendingClub rather than Prosper? For some borrowers, it could come down to the origination fee. While many other aspects of these two lenders are virtually identical, LendingClub’s origination fee can be as low as 1%, which could translate into a savings of several hundred dollars depending on the size of a loan.
Other situations in which LendingClub might make more sense than Prosper include instances when a borrower needs a cosigner. Not all lending organizations will work with less-than-qualified individuals, but by allowing for cosigners, LendingClub gives borrowers the ability to obtain funding even with an unsatisfactory credit score.
Time to funding: 7–10 business days
Costs: 6.95%–35.99% APR + 1%–6% origination fee
Payment Flexibility: Yes, you can change your bill due date at any time
Why You Might Need Prosper
When it comes to why an individual might opt for a loan from Prosper instead of LendingClub, the origination fee can again be the determining factor — but for the exact opposite reason. Prosper’s maximum of origination fee of 5% is lower than LendingClub’s fee of 6%. So depending upon the quality of your credit, you could end up paying more with LendingClub than you would with Prosper.
Prosper might also be a better option for if you if you are burdened by a sizable amount of debt, exceeding the 40% utilization limit that LendingClub has in place. This is especially true if you have a healthy credit score and can qualify for this lender’s most competitive rates.
Time to funding: 7–10 business days
Costs: 7.95%–35.99% APR + 2.41%–5% origination fee
Payment Flexibility: No, your payment date is fixed
Key Differences Between LendingClub and Prosper
On the surface level, there aren’t many differences between LendingClub and Prosper, but there are some subtle distinctions when it comes to securing a personal loan from either of these two peer-to-peer lenders.
- LendingClub charges a lower origination fee
- Prosper is more likely to approve average credit scores
- LendingClub permits cosigners
- Prosper will approve borrowers with higher credit utilization
Eligibility
In order to borrow funds using either of these two platforms, you’ll need to be a United States citizen of at least 18 years of age. Neither LendingClub nor Prosper currently issues loans to residents of Iowa. LendingClub likewise doesn’t operate in West Virginia and Prosper currently doesn’t service residents of Maine or North Dakota either.
Application and Approval Process
The application process with both LendingClub and Prosper is relatively the same, though Prosper does require a few more questions to be answered. In both cases, you’ll be asked to provide the requested information and upload digital copies of documents that support your claims. If everything goes smoothly, you could receive your funding in as few as two or three business days, though it can take up to a week or longer for some transactions to complete.
Which Company Is Better?
LendingClub and Prosper are so similar in terms of how they operate, that it’s difficult to declare either one as clearly better than the other. It truly comes down to the quality of the applicant’s credit report and the terms they qualify for. Most applicants with above-average credit are likely to receive interest rates and origination fees that are relatively the same no matter which of these two lenders they choose. Only individuals with very good or very bad credit are likely to see significant differences between the terms offered.
Which Company Is Better for Debt Consolidation?
Both LendingClub and Prosper are excellent options for responsible borrowers seeking to consolidate debt, but Prosper might be a better choice for those who are almost in over their heads with regard to what they owe. With Prosper, you can be utilizing up to 50% of your total credit line and still get approved for a personal loan. LendingClub, however, draws the line at 40%, so based on how much you are over versus how much you have to spend, Prosper could be your only choice.