- Peer-to-Peer Personal Loans for Borrowers
- What are peer-to-peer loans?
- How does peer-to-peer lending work?
- Features of peer-to-peer loans
- Peer-to-peer loans for small businesses
- Can you get a peer-to-peer loan with bad credit?
- Next steps: Pre-qualify for a peer-to-peer loan
- Methodology
- Recap
- About the authors
Prosper:
Qualifications:
Key Facts:Prosper is a peer-to-peer online lending platform that accepts borrowers across the credit spectrum and offers competitive rates and fees.Qualifications:- Minimum credit score: 660; borrower average is 709.
- Minimum income: $15,000; borrower average is $137,000.
- Maximum debt-to-income ratio: 50% (excluding mortgage); borrower average is 41.05% (including mortgage).
- Must be at least 18 years old.
- Must provide Social Security number and a U.S. bank account.
Available Term Lengths:2 to 5 yearsFees:- Origination fee: 1% to 9.99%.
- Late fee: The greater of $15 or 5% of the unpaid amount.
- Insufficient funds fee: $15.
- Mailed-in payment fee: $5.
LendingClub:
Qualifications:
Key Facts:LendingClub personal loans are a solid option for good-credit borrowers looking to consolidate debt and build their credit.Qualifications:- Minimum credit score: 600; average borrower score is above 700.
- Minimum income: None; lender requires proof of income. Borrower average is $100,000 per year.
- Maximum DTI: 40%.
- Minimum credit history: 36 months and two accounts.
Available Term Lengths:2 to 6 yearsFees:- Origination fee: 0%-8%
- Late fee: 5% of payment or $15 after 15-day grace period.
- Insufficient funds: $15.
Prosper:
Qualifications:
Key Facts:Prosper is a peer-to-peer online lending platform that accepts borrowers across the credit spectrum and offers competitive rates and fees.Qualifications:- Minimum credit score: 660; borrower average is 709.
- Minimum income: $15,000; borrower average is $137,000.
- Maximum debt-to-income ratio: 50% (excluding mortgage); borrower average is 41.05% (including mortgage).
- Must be at least 18 years old.
- Must provide Social Security number and a U.S. bank account.
Available Term Lengths:2 to 5 yearsFees:- Origination fee: 1% to 9.99%.
- Late fee: The greater of $15 or 5% of the unpaid amount.
- Insufficient funds fee: $15.
- Mailed-in payment fee: $5.
LendingClub:
Qualifications:
Key Facts:LendingClub personal loans are a solid option for good-credit borrowers looking to consolidate debt and build their credit.Qualifications:- Minimum credit score: 600; average borrower score is above 700.
- Minimum income: None; lender requires proof of income. Borrower average is $100,000 per year.
- Maximum DTI: 40%.
- Minimum credit history: 36 months and two accounts.
Available Term Lengths:2 to 6 yearsFees:- Origination fee: 0%-8%
- Late fee: 5% of payment or $15 after 15-day grace period.
- Insufficient funds: $15.
What are peer-to-peer loans?
Peer-to-peer loans connect borrowers and investors directly. They became popular for borrowers, especially those with low credit scores, after the 2008 financial downturn when many traditional banks’ lending requirements tightened. Peer-to-peer offered a better chance to borrow money.
Today, the original “retail” form of peer-to-peer lending — where individual consumers invest in portions of loans — has evolved to include institutional lending, where institutions like hedge funds or insurance companies back the loans. LendingClub ended its program for individual investors and now facilitates institutional lending. Prosper still allows consumers to invest in fractions of loans.
» MORE: Best loans for fair credit
How does peer-to-peer lending work?
Like other online loans, peer-to-peer lending is typically facilitated by a financial tech company and does not require an in-person application or a phone conversation with a loan officer. To get a peer-to-peer loan, borrowers follow the same process as they would for getting an online loan.
Retail and institutional peer-to-peer lending companies check eligibility through pre-qualifying, which involves a soft credit pull that doesn’t have an impact on your credit score.
Pre-qualifying allows you to select a loan amount and purpose while providing your name, date of birth and address. Then, you can see the annual percentage rate and loan terms you could be eligible for.
If you decide to apply, peer-to-peer lenders, like other lenders, confirm additional factors such as your credit score and credit history, which involves a hard credit check.
Features of peer-to-peer loans
Peer-to-peer loans are a type of online loan and share these common features:
Origination fee: This is an upfront fee that peer-to-peer lenders charge to cover the cost of processing the loan. The fee typically ranges from 1% to 10% of the loan amount. The lender typically deducts this fee from the loan proceeds before sending the funds to you.
Online experience: Peer-to-peer lenders allow borrowers to manage everything on the lender’s website, from applying for a loan and uploading documents to signing the loan contract and making monthly payments.
Since applications for peer-to-peer loans might be reviewed by multiple investors, they can take longer to fund than personal loans from banks or other online lenders — up to a week, in some cases.
Peer-to-peer loans for small businesses
iBusiness Funding and Kiva are peer-to-peer lenders that offer only small-business loans. iBusiness is best for established businesses that want to expand, while Kiva is better suited for micro businesses that are open to crowdfunding.
Can you get a peer-to-peer loan with bad credit?
Peer-to-peer loans can be an option for bad-credit borrowers (those with scores of 629 or below), but they may have interest rates from about 20% to 36%. A four-year, $15,000 loan with a 28.7% APR would have monthly payments of $529 and an overall interest cost of $10,383.
You can calculate average rates and payments using a personal loan calculator.
While lenders like LendingClub and Prosper have minimum credit scores in the bad- or fair-credit range, you may be eligible for lower rates with a credit union or by pursuing a secured or co-signed personal loan.
Next steps: Pre-qualify for a peer-to-peer loan
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 have an impact on your credit score. You can pre-qualify on NerdWallet and compare loan costs and features from multiple lenders.
Last updated on February 20, 2025
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Methodology
NerdWallet’s review process evaluates and rates personal loan products from more than 35 financial technology companies and financial institutions. We collect over 50 data points and cross-check company websites, earnings reports and other public documents to confirm product details. We may also go through a lender’s pre-qualification flow and follow up with company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. Our ratings award fewer points to lenders with practices that may make a loan difficult to repay on time, such as charging high annual percentage rates (above 36%), underwriting that does not adequately assess consumers’ ability to repay and lack of credit-building help. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.
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