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4 Best Peer-to-Peer Personal Loans for Borrowers

Amrita JayakumarFebruary 25, 2020

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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.

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.

» MORE: Pros and cons of unsecured personal loans

Summary of Best Peer-to-Peer Personal Loans for Borrowers

Our picks for

peer-to-peer loans for good credit

Prosper

on Prosper's website

Prosper

Prosper

Min. Credit Score

630

Est. APR

7.95 - 35.99%

Loan Amount

$2,000 - $40,000

on Prosper's website

Min. Credit Score

630

Key facts

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

Pros

  • No prepayment fee.

  • Option to change your payment date.

  • Offers joint loan option.

Cons

  • Charges origination fee.

  • Charges late fee of $15 or 5% of the unpaid loan amount.

Qualifications

  • Minimum credit score: 640, but average is 717.

  • Minimum credit history: Two years, but average is 11.

  • Minimum annual income: None, but average is $89,000.

  • Maximum debt-to-income ratio: 50% (excluding mortgage).

  • No bankruptcies filed within the last year.

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

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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Lending Club
See my rates

on NerdWallet's secure website

LendingClub

Lending Club

Min. Credit Score

600

Est. APR

10.68 - 35.89%

Loan Amount

$1,000 - $40,000

See my rates

on NerdWallet's secure 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 direct payment to creditors with debt consolidation loans.

  • Joint loan option.

  • Soft credit check with pre-qualification.

Cons

  • Charges origination fee and late fees.

  • Does not offer mobile app to manage your loan.

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: 2% to 6%

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

Disclaimer

*All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage and history. The APR ranges from 10.68% to 35.89%. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long-term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: 595 Market St suite 200 San Francisco Ca 94105. **Based on approximately 60% of borrowers who received offers through LendingClub’s marketing partners between Jan. 1, 2018, and July 20, 2018. The time it will take to fund your loan may vary.
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Our picks for

peer-to-peer loans for bad to fair credit

Upstart and Peerform cater to borrowers with lower credit scores. Upstart considers a borrower’s education level, profession and degree in its credit approval process. Peerform typically takes a week to fund loans.

Upstart

on Upstart's website

Upstart

Upstart

Min. Credit Score

600

Est. APR

6.16 - 35.99%

Loan Amount

$1,000 - $50,000

on Upstart's website

Min. Credit Score

600

Key facts

Upstart is a good option for those who have short credit histories and promising financial futures.

Pros

  • Accepts borrowers new to credit.

  • Fast funding.

Cons

  • Origination and late fees.

  • No secured or co-sign option.

Qualifications

  • Minimum credit score: 600.

  • Minimum credit history: None.

  • Minimum annual income: $12,000.

  • Max debt-to-income ratio: 45%.

Available Term Lengths

3 to 5 years

Fees

  • Origination fee: 0% - 8%.

  • Late fee: 5% of past due amount or $15, whichever is greater.

Disclaimer

1)This offer is conditioned on final approval based on our consideration and verification of financial and non-financial information. Rate and loan amount are subject to change based upon information received in your full application. This offer may be accepted only by the person identified in this offer, who is old enough to legally enter into contract for the extension of credit, a US citizen or permanent resident, and a current resident of the US. Duplicate offers received are void. Closing your loan is contingent on your meeting our eligibility requirements, our verification of your information, and your agreement to the terms and conditions on the www.upstart.com website. 2) § Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. The minimum loan amount in MA is $7,000. The minimum loan amount in Ohio is $6,000. The minimum loan amount in NM is $5,100. The minimum loan amount in GA is $3,100. 3) ‡ The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 15% and 36 monthly payments of $33 per $1,000 borrowed. There is no down payment and no prepayment penalty. Average APR is calculated based on 3-year rates offered in the last 1 month. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.
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Peerform
See my rates

on NerdWallet's secure website

Peerform

Peerform

Min. Credit Score

600

Est. APR

5.99 - 29.99%

Loan Amount

$4,000 - $25,000

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

  • Accepts borrowers with a high DTI ratio.

  • Accepts short credit history.

Cons

  • Charges origination fee.

  • No option to include co-signer.

  • Funding can take up to two weeks.

Qualifications

  • Minimum credit score: 600.

  • Minimum credit history: 1 year.

  • Minimum gross annual income: $10,000.

  • Debt-to-income ratio: 40% or lower, excluding mortgage.

Available Term Lengths

3 years

Fees

  • Origination fee: 1% to 5%.

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

Disclaimer

Read Full Review

» 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 25, 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 Best Peer-to-Peer Personal Loans for Borrowers

  • Prosper: Best for peer-to-peer loans for good credit
  • LendingClub: Best for peer-to-peer loans for good credit
  • Upstart: Best for peer-to-peer loans for bad to fair credit
  • Peerform: Best for peer-to-peer loans for bad to fair credit

Further reading.

Online Loans: 7 Best Lenders in 2019

By Amrita Jayakumar & Narottam Medhora

Personal Loan Interest Rates for August 2019

By Steve Nicastro