Compare peer-to-peer loans

Our top pick: LendingClub Personal Loan

• Min. Credit Score Required: 640
• Min. Loan Amount: $1,000
• Max. Loan Amount: $40,000
• APR: 6.95% to 35.89%
• Requirements: US citizen or permanent resident, verifiable bank account, steady source of income, ages 18+.

• Available in 48 states
• Checking rate won't affect your credit
• Can apply with a cosigner

Our top pick: LendingClub Personal Loan

A peer-to-peer lender offering fair rates based on your credit score.

• Min. Credit Score Required: 640
• Min. Loan Amount: $1,000
• Max. Loan Amount: $40,000
• APR: 6.95% to 35.89%
• Requirements: US citizen or permanent resident, verifiable bank account, steady source of income, ages 18+.

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How does peer-to-peer lending work?

Peer-to-peer (P2P) lending woks by connecting borrowers with investors who provide money for a loan. The main benefits of using a P2P platform is that they’re faster and can offer more competitive rates than traditional lenders like banks.

Why’s that? P2P platforms rely on algorithms rather than human underwriters to review your application, making it faster and cutting down on the overhead cost.

Many also consider data beyond your credit score when coming up with your rate when you apply— such as your level of education and employment history. So, you could potentially qualify for a good rate even if you only have student loans or a credit card.

How to get a P2P loan in 4 steps

1. Apply. First, customers fill out out an online form with details about your financial situation, including your income, employment, debts and credit history.
2. Get graded. P2P platforms typically gives your application a grade, which investors use to determine how much money they’re willing to lend you as well as your interest rate.
3. Wait for investors to fund your loan. Because an investor can choose to partially fund your loan, it might take longer to receive your funds than with a traditional personal loan from a direct lender.
4. Receive your money. If your loan is fully funded, it will be deposited into your account, generally within a few days.

How peer-to-peer lending got started in the US

Compare 4 peer-to-peer platforms

These peer-to-peer lending options can provide you with the financing you need to tackle a large expense.

1. LendingClub

LendingClub is one of the largest online peer-to-peer lending marketplaces in the world. Not only is it one of the few options that allows cosigners, you can also use it to connect with investors looking to fund both personal and business loans. And if you need to lower your monthly payments, LendingClub offers auto loan refinancing and medical loan refinancing options.

• Loan amounts: $1,000 to $40,000
• APR: 6.95% to 35.89%
• Terms: 3 to 5 years
• Eligibility: US citizen or permanent resident, verifiable bank account, steady source of income, ages 18+.

Go to Lending Club's site

2. Prosper

Prosper is one of the peer-to-peer lenders that started it all. It doesn’t affect your credit to check your rates, since it relies on a soft credit pull. Investors within Prosper’s network fund a variety of loan needs, from medical loans to personal loans for weddings and vacations.

• Loan amounts: $2,000 to $40,000
• APR: 6.95% to 35.99%
• Terms: 3 or 5 years
• Eligibility: Must be 18+ years old, an American citizen or US permanent resident and have a 640+ credit score.

Go to Prosper Funding LLC's site

3. Upstart

Upstart might have only been around since 2012, but that hasn’t stopped it from making headway as a top contender. It focuses on recent college graduates and may use your GPA, SAT score and work history to inform your interest rate and loan amount. But, you need a low debt-to-income ratio and decent credit to qualify.

• Loan amounts: $1,000 to $50,000
• APR: 5.67% to 35.99%
• Terms: 3 or 5 years
• Eligibility: Must have good to excellent credit and be at least 18 and a US citizen or permanent resident.

Go to Upstart Personal Loans's site

4. Peerform

With one of the lowest interest rates available for well-qualified borrowers, Peerform is a peer-to-peer lender that offers mid-sized loans as an alternative to traditional bank loans. And with its invite-only debt consolidation program, you may be able to lower your monthly payments or reduce your interest rate by combining your current credit card or other loan debt into one bill.

• Loan amounts: $4,000 to $25,000
• APR: 5.99%–29.99%
• Terms: 3 to 5 years
• Eligibility: Have a credit score of 600+, have a regular source of income, be at least 18 years old (19 in Alabama and Nevada), be a US citizen or permanent resident

Go to Peerform's site

Why get a peer-to-peer loan?

Peer-to-peer lending has been a growing part of the American credit sector since its inception in 2006. Here are a few reasons why borrowers choose to take out P2P loans:

• Lower interest rates. The interest and fees you pay for a peer-to-peer loan is generally lower than what you’d find with a bank. APR tends to vary between 5.3% to 30%, depending on what you’re looking to finance and your credit score.
• Flexible eligibility criteria. Peer-to-peer lenders base your rate on your credit history, income and other factors that a bank may not necessarily consider. You can apply with less-than-perfect credit, but your rate will be higher.
• Less work than a bank. Typically, P2P loan applications are less involved and require fewer documents than a traditional bank loan application. They also tend to have higher approval rates.
• Check your rate. You can get an interest rate quote without it affecting your credit score, which is usually not possible with a bank.

When to consider other types of lenders

• You have bad credit. Even with more relaxed credit requirements, you typically need to have good to excellent credit to qualify for a competitive rate with the top peer-to-peer lenders.
• You have an emergency expense. With peer-to-peer lending, you might have to wait a week or more for investors to fund your loan. Consider a direct online lender instead if you need money tomorrow.
• You’re in serious debt. Debt consolidation is one of the most common uses for a P2P loan, but it can’t help if you’re already struggling to make debt payments.
• You don’t want to pay fees. Most P2P lenders charge origination fees, so you might want to look elsewhere for a personal loan without fees.

What types of P2P loans are available?

While peer-to-peer lenders may offer a variety of loans, you’ll usually find most offer one or more of the following:

• Unsecured personal loans. Peer-to-peer loans are often unsecured, which means you won’t have to put up any collateral as security. Loan amounts usually range from $1,000 to $50,000, and you can use your funds for just about anything.
• Secured personal loans. If you have security, such as a car or valuable piece of property, you can take out a secured personal loan through a peer-to-peer lender. If you have bad credit, a secured loan may give a better chance of being approved and getting a lower rate.
• Debt consolidation loans. If you have a few different loans and credit cards that are draining your budget, a debt consolidation loan from a peer-to-peer lender may be helpful. You may be able to lower your monthly payments by combining your debts into one loan.
• Business loans. A newer type of financing is personal loans for business or P2P business loans. These business loans can help grow your business or get it up and running.

Is peer-to-peer lending safe?

Generally, yes. As long as you visit a legit lender that uses standard security measures in place like SSL encryption, P2P lending is no more dangerous than entering your information on any other lending website.

That being said, there is still always a risk: No website is immune from hacking. Make sure your lender is using an “https” URL and look for a lock icon in the browser before entering your information online. You also might want to review the privacy to learn what it does with your personal information.

3 questions to ask when comparing peer-to-peer lenders

Before you jump onto a peer-to-peer lending site, ask yourself these three questions to make sure you’re ready to borrow:

1. How much will I be charged? This is an important aspect to consider for borrowers and investors. When it comes to borrowing, you need to consider what your rate will be and how much the loan origination fee will take out of your loan funds. For investors, you’ll want to find out what the provider will charge you in fees.
2. Am I eligible? This is an important consideration for borrowers. Check the minimum criteria and make sure you meet it before applying. If your lender doesn’t offer preapproval with a soft credit check, applying could result in a dip in your credit with no loan to show for it.
3. What happens if I default? If you want to invest, see what the marketplace lender has in place in terms of collection services for late or defaulted payments. Some lenders will take on the responsibility of collecting payments and some will charge a fee for this service.

Bottom line

Peer-to-peer lending can be a great alternative to traditional loans for both borrowers and lenders. Most offer similar amounts, equal terms and have the added bonus of getting you away from a single lender with more strict eligibility requirements. However, that doesn’t mean you won’t have to meet any — you’ll still need a regular source of income, and many P2P lenders have a minimum credit requirement as well.

Not every peer-to-peer loan will be right for you, so compare your options before making a final decision.

Frequently asked questions

• Will my loan have multiple investors?

  It depends. Most investors attempt to spread out their funds to limit losses, but if you’re only requesting a small loan amount, you may end up with a single investor interested in funding the entirety of your loan. In most cases, however, you will likely have a few lenders funding you.

• How often do I have to make payments?

  As with many other types of loans, you typically have to make monthly payments.

• What if I want a business loan?

  If you need a business loan, start by reading our guide to peer-to-peer business lending. If you do decide to apply, you’ll need copies of recent business tax returns, business bank statements, details of existing loans and a detailed balance sheet. Your lender may require other documents, like a business plan, as well.

• When did peer-to-peer lending start?

  Peer-to-peer lending began about a decade ago, with the first American P2P lender starting up in 2006. However, in 2008 market regulation changed the way P2P lenders could function, which made the space more regulated and safer for borrowers.