BEST OF

3 Peer-to-Peer Personal Loans for Borrowers

Peer-to-peer loans are personal loans funded by individual investors rather than banks. See our picks for the best peer-to-peer loans from online lenders.

Amrita JayakumarFebruary 1, 2020
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Peer-to-peer lending lets you borrow money directly from a person or group of people instead of going through a traditional bank. They're typically facilitated online by a financial tech company and do not need an in-person application or even a phone conversation with a loan officer.

Some online lenders, notably Prosper and LendingClub, popularized the concept of peer-to-peer loans in the U.S. Here’s our roundup of lenders that offer peer-to-peer personal loans for borrowers.

Summary of Peer-to-Peer Personal Loans for Borrowers

Lending Club
Check rate

on LendingClub's website

LendingClub

4.0

NerdWallet rating 
Lending Club

Est. APR

8.05 - 35.89%

Loan Amount

$1,000 - $40,000

Min. Credit Score

600

Check rate

on LendingClub's website

Min. Credit Score

600

Key facts

LendingClub is a pioneer of peer-to-peer lending and a good option if you want to consolidate your debt.

Pros

  • Offers co-signed and joint loan options.

  • Offers direct payment to creditors with debt consolidation loans.

  • Soft credit check with pre-qualification.

Cons

  • Borrowers can only choose from two repayment term options.

  • Rates are high compared to other online lenders.

  • Charges an origination fee.

Qualifications

  • Minimum credit score of 600. LendingClub uses FICO 8 credit scoring model.

  • Minimum credit history of three years.

  • Debt-to-income ratio of less than 40% for single applications, 35% combined for joint applicants.

Available Term Lengths

3 to 5 years

Fees

  • Origination fee: 1% to 6%

  • Late fee: Greater of $15 or 5% of payment after 15-day grace period.

Disclaimer

A representative example of loan payment terms is as follows: you receive a loan of $13,411 for a term of 36 months, with an interest rate of 12.16% and a 5.30% origination fee of $711, for an APR of 15.99%. In this example, you will receive $12,700 and will make 36 monthly payments of $446.46. Loan amounts range from $1,000 to $40,000 and loan term lengths are 36 months or 60 months. Some amounts and term lengths may be unavailable in certain states. APR ranges from 8.05% to 35.89% and is determined at the time of application. Origination fee ranges from 3% to 6% of the loan amount. Lowest APR is available to borrowers with excellent credit. Advertised rates are subject to change without notice. Loans are made by LendingClub Bank, N.A., Member FDIC (“LendingClub Bank”), a wholly-owned subsidiary of LendingClub Corporation, NMLS ID 167439. Loans are subject to credit approval and sufficient investor commitment before they can be funded or issued. Certain information that we subsequently obtain as part of the application process (including but not limited to information in your consumer report, your income, the loan amount that your request, the purpose of your loan, and qualifying debt) will be considered and could affect your ability to obtain a loan from us. Loan closing is contingent on accepting all required agreements and disclosures at Lendingclub.com. “LendingClub” is a trademark of LendingClub Bank.

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Prosper
Check rate

on Prosper's website

Prosper

4.5

NerdWallet rating 
Prosper

Est. APR

7.95 - 35.99%

Loan Amount

$2,000 - $40,000

Min. Credit Score

640

Check rate

on Prosper's website

Min. Credit Score

640

Key facts

Peer-to-peer lender Prosper has rates and fees that compare to other lenders for good-credit borrowers.

Pros

  • Option to change your payment date.

  • Offers joint loan.

  • Offers wide range of loan amounts. 


Cons

  • No rate discount for autopay.

  • Charges origination and late fees.

  • Borrowers can choose from only two repayment term options.

Qualifications

  • Minimum credit score: 640; borrower average is 726.

  • Minimum credit history: 2 years.

  • Minimum income: No minimum income requirement; borrower average is $113,000.

  • Maximum debt-to-income ratio: 50% (excluding mortgage); borrower average is 18% with housing payment.

  • No bankruptcies filed within the past year.

  • At least three open accounts on credit report.

  • Fewer than five credit bureau inquiries in the last six months.

  • Must be at least 18 years old.

  • Must provide Social Security number and a U.S. bank account.


Available Term Lengths

3 to 5 years

Fees

  • Origination fee: 2.41 to 5%.

  • Late fee: $15 or 5% of unpaid amount (whichever is greater).

  • Insufficient funds fee: $15.

Disclaimer

For example, a three-year $10,000 personal loan would have an interest rate of 11.74% and a 5.00% origination fee for an annual percentage rate (APR) of 15.34% APR. You would receive $9,500 and make 36 scheduled monthly payments of $330.90. A five-year $10,000 personal loan would have an interest rate of 11.99% and a 5.00% origination fee with a 14.27% APR. You would receive $9,500 and make 60 scheduled monthly payments of $222.39. Origination fees vary between 2.41%-5%. Personal loan APRs through Prosper range from 7.95% to 35.99%, with the lowest rates for the most creditworthy borrowers. Eligibility for personal loans up to $40,000 depends on the information provided by the applicant in the application form. Eligibility for personal loans is not guaranteed, and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All personal loans made by WebBank, Member FDIC.

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Peerform
See my rates

on NerdWallet's secure website

Peerform

3.0

NerdWallet rating 
Peerform

Est. APR

5.99 - 29.99%

Loan Amount

$4,000 - $25,000

Min. Credit Score

600

See my rates

on NerdWallet's secure website

Min. Credit Score

600

Key facts

Peerform accepts low credit scores, with rates and terms similar to other bad-credit lenders.

Pros

  • Competitive rates among bad-credit lenders.

  • Soft credit check with pre-qualification.

Cons

  • Reports payments to only one of the three major credit bureaus.

  • Charges origination and late fees.

  • No option to change your payment date.

  • Borrowers have only one repayment term option.

Qualifications

  • Minimum credit score: 600. This lender uses the FICO credit scoring model.

  • Minimum credit history: one year.

  • Minimum annual income: $10,000.

  • Maximum debt-to-income ratio: 40%, excluding mortgage.

  • Must be a United States citizen or permanent resident.

Available Term Lengths

3 years

Fees

  • Origination fee: 1% to 5%.

  • Late fee: 5% of payment or $15, whichever is greater.

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» MORE: Compare unsecured personal loans and apply

What are peer-to-peer loans?

Peer-to-peer loans, aka marketplace loans, originated with the idea of connecting borrowers and investors directly.

For borrowers, especially those with bad credit, this meant a better shot at getting money without going through traditional banks and credit unions, which tightened up lending after the 2008 financial downturn.

For investors with money to spare, lending to peers promised a higher rate of return than other investment channels, like the stock market.

Today, peer-to-peer lenders operate in an increasingly crowded field of online personal loan companies, some of which partner with the banks that previously discontinued their lending options.

» MORE: NerdWallet picks the best personal loans

Features of peer-to-peer loans

Peer-to-peer loans carry features that distinguish them from other types of online loans, such as origination fees and borrower grades.

  • Origination fee: This is an upfront fee that most peer-to-peer lenders charge to cover the cost of processing your loan. The fee typically ranges from 1% to 8% of the loan amount.

  • Online experience: Peer-to-peer lenders were among the first to develop automated underwriting algorithms that allow quick risk assessments without the need for loan officers. That means borrowers can manage everything on the lender’s website, from applying for a loan and uploading documents to signing the loan contract and making monthly payments.

  • Borrower grades: Peer-to-peer lenders assign potential borrowers internal grades based on their financial data, such as credit score and the ratio of debt to income. These grades serve as a guide for investors so that they can choose grades to fund based on their risk tolerance. Borrowers typically cannot see their own grades, but some companies explain the grading rubric on their websites.

  • Time to fund: Because peer-to-peer loan applications might be reviewed by multiple investors, they can take longer to fund — up to a week — than personal loans from banks or other online lenders.

Peer-to-peer loans for small business

Funding Circle and StreetShares are peer-to-peer lenders that offer only small-business loans. FundingCircle is aimed at businesses that need funding to grow, while StreetShares is better suited to businesses looking for working capital.

» MORE: Small business peer-to-peer loans

How to pre-qualify for a peer-to-peer loan

As with most online lenders, you can pre-qualify for a peer-to-peer loan to see estimated rates and terms before you formally apply. The pre-qualification process usually involves a soft credit check, which doesn't impact your credit score. You can pre-qualify on NerdWallet and compare loan costs and features from multiple lenders.

Last updated on February 1, 2020

Methodology

NerdWallet's ratings for personal loans award points to lenders that offer consumer-friendly features, including soft credit checks, no fees, transparency of loan rates and terms, flexible payment options, accessible customer service, reporting of payments to credit bureaus and financial education. We also consider the number of complaints filed with agencies like the Consumer Financial Protection Bureau. This methodology applies only to lenders that cap interest rates at 36%, the maximum rate financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation of any sort for our reviews.

To recap our selections...

NerdWallet's Peer-to-Peer Personal Loans for Borrowers