How Prosper works
Peer-to-Peer Lending: Prosper is America’s first peer-to-peer lending marketplace—connecting people looking to borrow money with people who have money to invest. Prosper.com handles the servicing of each loan on behalf of matched borrowers and investors. Peer-to-peer lending gives borrowers low interest rates and an alternative to traditional bank financing while investors benefit from fewer middlemen and high yield returns.
Benefits of borrowing from Prosper:
- Easy online application
- Fixed loan rates
- Loans are unsecured—no collateral required
- Multi-year terms
- Easy fixed monthly payments
- Loan sizes from $2,000 to $35,000
- No prepayment penalties
- No upfront fees—an origination fee is taken from the loan proceeds
1. Create your loan listing:
Creating a loan listing on Prosper is easy and typically takes only 15-20 minutes.
The steps include:
- Give us some basic information about yourself
- Check your rate and review your loan options
- Finalize your listing with a description of your loan purpose and your financial situation
If you qualify, you will be presented with an interest rate and corresponding monthly payments based on the requested loan amount—plus some alternatives for lower rates or lower payments.
What’s the difference between a listing and a loan?
A listing is your request for a loan and will be viewed by potential investors. You will receive a loan if investors commit sufficient funds to your listing and your information has passed Prosper’s verification process.
2. Investors commit funds to your loan
Once your listing is active on Prosper, investors will be able to view your listing and can start investing in your loans. This means depending on your loan amount, you may have dozens of individual investors. You can see the progress of your loan funding commitments at any time, by returning to Prosper and going to My Account.
The listing will stay active until either it has received sufficient investor commitments or the 14-day listing period ends. If it does not receive at least the minimum required level of investor commitments within the 14-day period, no loan will be made. If you want to try again, you can do so by creating a new listing.
What happens while I wait for investors to commit to fund my loan?
You’ll receive an email asking for specific loan verification documents – including your driver’s license, address verification, bank statement, and a W-2, when applicable. Getting these documents to Prosper often speeds up how fast investors commit to invest in your loan.
3. Receive your money
Once your listing has received sufficient investor commitments and the verification process is complete, the loan proceeds will be deposited directly into your bank account. This usually only takes a few days.
How long does the borrowing process take?
The average borrower has the loan proceeds deposited into their account within 8 days of submitting their application.
4. Make monthly payments
Prosper will make monthly automatic withdrawals from your bank account in the amount of your agreed-upon monthly loan payment. If you choose, you may make an optional additional loan payment or pay off your loan early without any penalty fees.
Frequently Asked Questions
What is the difference between Interest Rate and APR?
Your interest rate is based on the percentage of the loan amount and is considered to be a base fee for borrowing money, and directly affects monthly payments. APR (Annual Percentage Rate) includes the interest rate as well as fees that are necessary to finance the loan.
What is my Prosper Rating?
Every loan application is assigned a Prosper Rating—a proprietary rating system that allows for consistency in the evaluation of applicants. Potential investors use Prosper Ratings to help decide whether to commit to invest in your loan listing.
Can I withdraw my listing?
You can withdraw your listing at any time until it is fully funded or the 14-day listing period ends, whichever comes first.
Why does Prosper charge fees?
An origination fee is only charged if your loan is funded and money is transferred to you. The origination fee—which is a percentage of the amount borrowed—is taken from the loan, before proceeds are transferred to your account. The origination fee varies from .50% to 4.95% depending on your Prosper Rating and the terms of the loan.
In addition, a $15 fee will be charged upon a failed automatic withdrawal, returned check or bank draft and if a monthly payment is more than 15 days late.
What is Prosper?
Prosper Funding LLC owns and operates an online peer-to-peer marketplace where borrower members may borrow money and investor members may purchase Notes issued by Prosper that correspond to the loans listed on the marketplace.
Peer-to-peer lending gives borrowers an alternative to a traditional bank loan—and fewer middlemen means Prosper investors also benefit.
Important Things to Know About Your Protection
How is Prosper regulated?
Investing and loan servicing activities on the Prosper marketplace are subject to state and federal regulation.
Loans originated through the Prosper marketplace are made by WebBank, a Utah-chartered Industrial Bank, which is regulated by the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC).
Prosper Funding LLC and its affiliate, Prosper Marketplace, Inc., are subject to examination, supervision, and potential regulatory investigations and enforcement actions by state agencies that regulate consumer credit, trade, and commerce; and federal agencies, such as the Federal Reserve Board and the Federal Trade Commission, that administer the federal consumer protection laws, trade, and commerce.
Prosper Funding LLC and the loans originated through the Prosper marketplace must comply with applicable state and federal lending laws such as the federal Consumer Credit Protection Act, including, as applicable, the Truth-in-Lending Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, and Electronic Fund Transfer Act, as well as the federal Electronic Signatures in Global and National Commerce Act (ESIGN) and other federal and state laws governing privacy and data security and prohibiting unfair or deceptive business practices.
How are investors in Notes issued before February 1, 2013 affected by the changes described on this website?
There has been no change to the economic terms of Notes issued before February 1, 2013. The principal balance, applicable interest rate and APR, maturity date and other payment terms are unchanged. The most significant change is that these Notes are now obligations of Prosper Funding LLC (Prosper) rather than being obligations of Prosper Marketplace, Inc. (PMI)
Prosper was formed by PMI on February 17, 2012, and is wholly-owned by PMI. On January 31, 2013 PMI transferred to Prosper most of its assets and liabilities. For example, Prosper now owns this website, and all of the software and intellectual property necessary to maintain and operate this website and to allow loans to be made and related Notes issued in the same manner as was occurring when PMI owned and operated this website. PMI also transferred to Prosper all of the loans that were funded through this website prior to February 1, 2013, including the loan relating to your Note.
Prosper assumed responsibility for payment of your Note by becoming a party to the indenture that governs your Note as of January 31, 2013. So Prosper is now the sole Obligor on your Note, not PMI. Prosper also now owns the related borrower loan, not PMI, and will be applying proceeds of that loan to repay your Note in the same manner PMI had committed to do so.
The security of your Note has been improved by an amendment to the indenture that governs your Note. As of January 31, 2013, the trustee under that indenture now has an express security interest in the loan relating to your Note, whereas previously the trustee had an interest only in proceeds of that loan and in certain accounts into which such proceeds were to be deposited.
Where can I find legal terms and policies?
Please view the policies page to learn more about the policies that might apply to you.
Will you sell or make public my personal information?