Compare 3 leading peer-to-peer lenders so you can find the best deal for your needs.
An overview of Prosper, LendingClub and Upstart
Prosper, LendingClub and Upstart are peer-to-peer (P2P) lenders. Upstart is the youngest of the three, established in the spring of 2012. Prosper and LendingClub were founded in 2005 and 2006, respectively.
Prosper and Upstart solely deal in personal loans, but LendingClub has a few more options in its suite of lending solutions, including auto refinancing, business loans and patient financing for physicians through LendingClub. All three providers only operate online.
What is a peer-to-peer lender?
Peer-to-peer lenders are providers that source the funds for your loan from individual investors, rather than from a bank. These investors — or “peers” — can usually partially or fully fund a loan.
Am I eligible for a loan with Prosper, LendingClub and Upstart?
Beyond being at least 18 years old and a citizen or permanent resident of the US, you must also meet the following requirements to apply for a loan from each lender.
You must have a FICO credit score of at least 640.
You must have good to excellent credit and a bank account in your name. Currently, LendingClub doesn’t lend to residents of Iowa or West Virginia.
You must have a credit score of 620, a regular source of income and a verifiable bank account in your name. Upstart doesn’t lend to residents of West Virginia.
Which offers lower interest rates?
You’ll find rates from 6.95% to 35.99% APR with Prosper. It evaluates your application to categorize you into one of seven Prosper Ratings, from AA to HR.
LendingClub offers APRs that range from 6.16% to 35.89%.
With Upstart, you can expect an APR range of 8.36% to 29.99%.
While Upstart has a higher starting APR, its maximum rate is about 5% less than its competitors. This means that even if you don’t qualify for the lowest APR these lenders offer, you don’t have to worry about being charged more than 30% in interest and other fees.
Which comes with fewer fees?
While charges an origination fee of 1% to 5% of the borrowed amount. If you want to pay by check, there’s a $5 processing fee.
LendingClub charges an origination fee between 1% to 6%. Its late fees are the same as Prosper’s, but its check processing fee is only $7.
Upstart’s origination fees can be as low as 0% or as high as 8%. And while it has the same late payment fees as Prosper and LendingClub, its grace period is only 10 days.
Prosper wins out by having the lowest range for origination fees, charging no more than 5% of the loan amount.
Lucas's hard work pays offLucas’s business is up and running. It’s doing well, his investors are happy and he’s starting to turn a profit. Now that everything sailing smoothly, he wants to consolidate some of the personal debt he built up while he was bringing his vision to life.
Traditional banks aren’t too convenient, and he still pretty busy these days. He’s interested in online lenders, and he needs $12,000 to get everything in one place. Lucas considers Prosper, LendingClub and Upstart for his borrowing needs.
|Starting APR||Origination Fee||Ease of application|
|Prosper||6.95%||$120–$600||Check rates without affecting credit, with decisions that typically come within a week of submitting your application.|
|LendingClub||6.16%||$120–$720||Rate checks don’t affect credit, and the entire process from application to disbursement of funds can take less than a week.|
|Upstart||8.36%||$0–$960||Credit won’t be affected by rate check, and funds are generally sent from one to five business days after you’ve signed the loan agreement.|
After weighing the pros and cons, Lucas ends up choosing Prosper. Since he doesn’t need the money right away, funding speed isn’t as important as the APR and origination costs. Because Prosper offers a longer grace period with payments — and potentially a lower APR and origination fee — it seems like the best fit for his circumstances.
Which has a better reputation?
As of October 2018, Prosper rates 6 out of 10 based on 50 reviews. However, it is accredited by the Better Business Bureau (BBB) and has a rating of A+ based on the BBB’s grading system.
LendingClub has more recent reviews on Trustpilot than Prosper, but this isn’t necessarily a good thing — it only scores a 4.7 out of 10. Its BBB profile is a little better with an A- rating and accreditation.
Upstart has the highest rating on Trustpilot, with a score of 9.8 out of 10. However, as of this writing, the majority of reviews were left in the last year. And many of those — around 10 pages — were left during the month of September alone. This influx of positive reviews is suspicious, especially when there were only a handful of reviews left before this point. However, it is accredited by the BBB and has an A+ rating, putting it on the same playing field as its competitors.
Upstart certainly has the best score, but you’ll want to vet reviews carefully and talk to Upstart itself before applying to make sure you’re getting a good deal.
How much can I borrow with each lender?
You can borrow from $2,000 to $2,000 through Prosper.
Personal loans range from $1,000 to $1,000 with LendingClub.
You can borrow anywhere from $1,000 to $1,000 with Upstart.
Upstart easily takes the win by offering a broader borrowing range of loan amounts than Prosper and LendingClub.
Which lender can get me money faster?
Prosper allows you to check your rates within minutes. A full application includes standard personal and financial information and could require you to upload supporting documents. Application decisions are usually made within one week.
Your application with LendingClub should only take a few minutes to complete. From there, it goes to underwriting. If all your documents are uploaded correctly, it can take a few business days from start to finish to receive your funds.
The application process with Upstart is fairly quick. While there isn’t a solid start-to-finish time, once your application is approved and you accept an offer, you could see your funds in as little as one business day. Loans intended for education-related purposes take an additional three days to process.
LendingClub’s total turnaround to funding can be less than a week, beating out Prosper and Upstart.
Peer-to-peer vs. direct online lenders
Peer-to-peer platforms have a lot of advantages, but sometimes a direct lender might be a better fix. When you have an emergency expense or just need funds fast, direct lenders typically have a faster turnaround time than their peer-to-peer counterparts. And since they’re not relying on investors for funding, online lenders can sometimes (though not always) be more flexible on requirements and terms.
The lender that’s best for you could depend on how much you need to borrow and when you need it. Upstart may pull ahead in interest rates, but if you’re in a hurry LendingClub could be a better choice. On the other hand, if you’re more concerned about fees, Prosper may be a better bet than the other two.
Ultimately, it’s important to compare your personal loan options thoroughly to find an option that best fits your preferences and needs.
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