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Prosper Debt Consolidation Loan Review

Claire Matthews

Financial Advisor, MoneyBeagle

Prosper Debt Consolidation Loan ReviewIf you would like to reduce the number of loans that you pay each month, then you might be wondering about the benefits of a debt consolidation loan. By consolidating your debt, you will only need to make a single payment, and managing your budget will become that much easier. The problem that many people have is finding the right finance company for their needs, and if you can relate to that problem, moving forward can seem difficult. Although many solutions exist, consumers have reported positive results after using the services of Prosper. This company offers debt consolidation loans to those who need them, and it could be the right path for you and your budget. The following information will cover some of the top things that you will need to know when you want to move forward with the process.

Interest Rate

When they are getting a loan from the bank, some people forget to take the interest rate into consideration, and you won't want to repeat this error. If you are facing high interest rates, repaying your debt can take longer than you want. The team at Prosper works hard to offer the best possible interest rate to the clients, and enlisting the services of Prosper can provide you with impressive results. Before you decide whether this path is right for your situation, you will know the rate that you can expect to pay.

Banks Compete for Your Attention

If you apply for a loan with local banks, you will need to speak with several loan officers to find a great deal with reasonable terms. Not only is this process time-consuming, but it also puts hard inquiries on your credit report, which can harm your rating. If you want to avoid those problems, then Prosper could be an attractive option for you. After you apply, lenders from around the nation will compete for the right to offer a loan to you. As a result, customers who have used the service have enjoyed loans with unbeatable terms, and you can do the same if you take action. You can review each lender's offer so that you can choose one that fits your needs the best.

Loan Duration

When it's time to get a debt consolidation loan, people will want to know how flexible the loan is and the amount of time that they will have to repay it. As far as loan durations are concerned, Prosper has received mixed reviews. When you borrow money from the company, you will need to repay the debt within three to five years. So if you are looking for a long-term loan to reduce your monthly payments, then Prosper might not make sense, and you won't want to overlook this fact if you don't want to experience unneeded problems. On the other hand, Prosper will never impose any extra fees if you decide to pay your loan off early. If your objective is to get a short-term debt consolidation loan, you can count on Prosper to take care of you.

Prosper Loans and What You Should Know

As marketplace lending company, Prosper Loans has been running for years now and have been giving people with debt a way out, with loans ranging from a few thousand dollars to a whopping $35,000. The good thing is they can take out this loan for any purpose that might serve them. A few examples why people turn to Prosper Loans aside from the usual debt consolidation, are home renovations, big life events, or major or luxury purchases.

Note, that Prosper Loans is not a bank, but acts as a peer-to-peer lending platform. As this type of lending platform, Prosper asks investors to combine and fund their cash into consumer loans. So, with each loan that Prosper acquire, it is not only one person who is giving out a loan, rather dozens to even hundreds of various people pool in from as little as $25 to more so that people can take out loans. Therefore, with this platform, the danger that a borrower would not be able to satisfy his loan will then be distributed to a number of investors, thus the company then will be in no fear of having to lose any money. With this, Prosper can then offer loans to consumers, even those who may not be qualified to a credit card or even a bank loan. Apart from that, Prosper loans may be utilized for other reasons as well. One of which is to give people with an outstanding credit rating a low interest loan rate, sometimes even a single digit. People can then use this loan for something that maybe beneficial to them. It might be something practical like home improvements or to take a class, to big things like starting their own business. Prosper Loans allow people to borrow anywhere in between $2,000 and $35,000. Unlike some lenders who only focus on debt consolidation, you can take out a loan for any purpose that might make you have the need for money. It might be something as imperative as paying off other debts to planning a wedding, or even something that might be something else such as the need to buy a car, updating the roofing system of your house to even a trip to the Maldives.

Prosper Loans does not charge any pre-payment penalties which makes it a great debt consolidation tool. It has a payment scheme which can last from three years (36 months) to five years (60 months). Prosper Loans will then inform you of a fixed payoff schedule which assist customers in estimating their debt payoff automatically. As for the interest rate, this may vary according to one’s credit rating. There are those who claim to have only received a 5% interest rate, while there are even few who said that they got a lower rate. However, according to Prosper Loans, interest rates begin at 5.99%, and this is for people with a good credit rating. From this amount, the interest rate will go up, again depending on the credit score, and it can reach up to a maximum rate of about 36% APR.. People with a steady income coupled with a good credit score, might be able to afford the excellent and low interest rate that Prosper will give them off a personal loan.

If you do get an interest rate which is of double digit, think about it first. Be quick to make sure that you are getting the best rate possible, as Prosper’s marketplace adjusts rates to relate with risk. That is why few people may be deemed as risky borrowers and can only get high APRs. You may check your credit score with the company at any time. The inquiry will not affect the consumer’s credit score in any way.

How to apply for a Prosper loan

The initial action that you need to do when applying for a loan from Prosper is to check if you will be qualified. How will you know? You can ask the company about your credit score. They will ask certain credit information, on a “soft inquiry” basis. Applicants need not worry as this would not be presented on the credit report. With what information you have given them, Prosper will then give you a range of interest rates. If for any reason, you cannot get approved, Prosper will disclose this at this time. Before you can make a loan request, customers will first need to set up a profile, which is quite easy. This is so that they may file for a loan request. There are no fees to pay upon application, and there are no financial liabilities not until the loan which the customer has asked for has been approved and financed.

How Prosper Loans work

As it is a peer to peer lending platform, your loan will then be auctioned off.  That means that lender can then vie to get the best possible loan. So, if a customer has an excellent credit rating, he can expect that his loan will be funded swiftly. However, the downside to this is that some loans may take time to be financed, and there are even those who do not get any funding at all. The loan will then verified as soon as the listing closed. Prosper will then get in touch with the customer so as to authenticate the customer’s identity before they can transfer any amount, which is the loan fund, to the customer’s bank account. For some, the verification process may seem rigorous. The customers will need to send a copy of his ID card and two proofs of address (it is recommendable to send bills such as electricity, water, or even credit card bills from within the last six months). Afterwards, a representative from Prosper will call you. As soon as this verification process is done with, the cash will then be sent to the customer’s bank account. Do expect that the money sent will be less the origination charge. As of this time, Prosper origination fees range from 1% to 5% of the customer’s loan amount. For people to have a lower fee, they will need to have a good credit rating. Read more: How does debt consolidation work?

The advantages and disadvantages of Prosper Loan

Many people take a certain liking to how Prosper, with its peer to peer platform, works. However, just like any other loan, there are some pros and cons to it. One of the advantages of prosper loans is that the money can be made available to borrowers who may not qualify for other loans, especially to those by traditional banks. Another thing is that the auction environment can give an opportunity for better interest rates. Also, the soft credit inquiry lets people apply for a loan without the inquiry having to influence their credit score, as the rating will only be touched once the loan has been funded. Plus, there are no early payoff penalties, Moreover, Prosper Loans places a human face on lending. This means that borrowers can expound on why investors should lend them money and make a case for why they think they are a good investment. Of course, there are also a few disadvantages to Prosper Lending. Some might complain that the interest rate are still generally high, this is of course true for all except those who are the best qualified borrowers. Another thing to look out for is that Prosper may charge origination fee based on the credit score. Finally, a short term loan may not be a good thing for most people, so bear in mind that you have three to five years to finish off your loan.

Comparing Prosper Loans to Other Lenders

People who are searching for the best possible loan should always make inquiries to more than one lending firm. This is so you may evaluate the loan amount, credit rating, loan term, and other charges which the lending companies out there will give. We will help you out by comparing Prosper Loans with others in the same industry. Lending Club is another loan company that gives terms just like Prosper’s. That is why most people who cannot meet Prosper’s requirements turn to Lending Club. The good side with Lending Club is the applicant only needs a minimum credit rating of 600 and that they do allow a bigger loan which is at a maximum of $40,000 through Lending Club with the same rates and loan terms as Prosper. Another thing is that Lending Club allows for a co-signer. However, as it is a peer to peer platform, it will take three to seven days before the money will be released. SoFi offers higher loan amounts and even lower interest rates when compared to Prosper. Still the bad side to SoFi is that its customers all ought to have an outstanding credit score. Customers may borrow up to $100,000 and the interest may range from 5% and 14%. Just like Lending Club and Prosper, it may take a while before your loan can be funded.

Final Thoughts

The amount that you owe, your income and your plans are some of the things that you need to consider before you can decide if getting a loan from Prosper is a smart move. Read more about how to get a debt consolidation loan. Those who need a long-term solution won't find the answer for which they are looking, but anyone who is happy with a term of five years or less is in the right place. When banks compete for your time and attention, you will always get a great deal, and countless happy customers can't be wrong.

Claire Matthews

Claire Matthews

Financial Advisor, MoneyBeagle

Claire is a noted financial writer and author of hundreds of articles about personal and business finance. Before getting her MBA, she graduated with a BS in Economics. Her coursework focused on the different ways that debt, debt structure, and debt restructuring affect micro and macro-economic issues.

Upon graduation, she took a job at an investment bank that worked with municipal and county governments to help them reorganize and structure their debt so they could continue to provide essential city services.

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