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If you need to take out a personal loan to pay for a major expense or to refinance high-interest debt, working with a peer-to-peer lender is one option to explore.
Peer-to-peer lenders typically use online platforms to connect people with investors who will finance their loans. You may qualify for a peer-to-peer loan even if your credit isn’t perfect because peer-to-peer lenders are often more flexible with their lending requirements than traditional banks.
Check out our picks for the best peer-to-peer lenders that offer personal loans. All of them allow you to apply for prequalification so you can get an idea of the interest rate and terms you might be offered — making it easier to shop around for the best loan for your situation.
- Best for debt consolidation: Prosper
- Best for co-borrowing: LendingClub
- Best for small loans: Upstart
- Best for fair credit: Peerform
Best for debt consolidation: Prosper
Why Prosper stands out: Prosper says debt consolidation is the most popular use of its personal loans, which are available in loan amounts between $2,000 and $40,000. Debt consolidation may help you save money by reducing the amount of interest you pay on your debt.
- Fees: Prosper charges an origination fee between 2.4% and 5% of the amount borrowed. Prosper deducts the fee from the loan before it’s disbursed, so make sure you account for that before submitting the amount you’d like in your loan application.
- Repayment terms: Prosper offers only two loan terms: three years or five years. But you can pay off your loan early with no prepayment penalty.
- Eligibility: Prosper says to qualify for a loan, you must have income “greater than $0,” a debt-to-income ratio under 50%, no bankruptcies in the past 12 months, fewer than five inquiries from credit bureaus in the past six months, and at least three open trades on your credit reports. Repeat borrowers may have additional requirements.
Best for co-borrowing: LendingClub
Why LendingClub stands out: If you aren’t eligible for a loan on your own or want to improve your rate, LendingClub allows you to add a co-borrower to your application. With a joint application, LendingClub looks at your combined income and your co-borrower’s credit history along with yours, potentially improving your chances of getting a loan. LendingClub offers loans between $1,000 and $40,000.
- Fees: LendingClub will charge you an origination fee of 1% to 6% of your loan amount, which is included in your APR.
- Repayment terms: Like Prosper, LendingClub offers only three- and five-year loan terms, and there’s no prepayment penalty.
- Eligibility: LendingClub will consider info about you from credit bureaus, your credit scores and, according to its website, “other information that predicts the likelihood that you’ll make on-time payments until your loan is fully repaid.”
Best for small loans: Upstart
Why Upstart stands out: Upstart offers loans as small as $1,000, so you may not have to borrow more than you need. Many personal loan lenders have higher starting loan amounts. Keep in mind that your minimum loan amount may be higher depending on where you live. Upstart can also be fast: If your application is approved, you may be able to get your loan funds the next business day.
- Fees: Upstart charges a number of fees that can add to the cost of your personal loan. Its origination fee ranges from 0% to 8% of loan amounts, which is deducted from your total amount borrowed. There’s also a late-payment fee, returned-payment fee and a fee for requesting paper copies of your records.
- Repayment terms: Upstart offers three- and five-year repayment terms, with no prepayment penalty.
- Eligibility: Upstart considers your education and employment along with your credit scores and reports to help decide if you’re likely to repay your loan.
Best for fair credit: Peerform
Why Peerform stands out: If your credit scores are in the “fair” range, Peerform may be a good lender for you. Peerform requires a minimum FICO® score of 600 and a maximum debt-to-income ratio below 40% (not including mortgage debt). Loan amounts range from $4,000 to $25,000.
- Fees: Peerform’s origination fee ranges from 1% to 5% of the total loan amount. That amount is taken from your amount borrowed. There’s also a $15 fee if an automatic deduction from your bank account is rejected, a $15 late-payment fee and a $15 check-processing fee (which you’d have to pay for each payment you make by check).
- Repayment terms: Peerform offers three- and five-year loans. If you want to pay off your loan early, Peerform won’t charge you a prepayment penalty.
- Eligibility: In addition to credit scores and debt-to-income ratio, Peerform says you have to have a pretty clean credit profile for the most recent 12 months — without any issues such as current delinquencies or a recent bankruptcy.
What you should know about peer-to-peer loans
Peer-to-peer, or P2P, lending is an alternative to borrowing from traditional banks and credit unions. When you apply for a loan on a peer-to-peer lending platform, the loan is posted to investors. Investors then review the different loan options to identify investment opportunities and decide if they’d like to help fund a loan.
Some peer-to-peer lending marketplaces also target small-business owners who need funding to establish or grow their companies. If you want to get a small-business loan, you can explore peer-to-peer lenders that cater to this market, like Funding Circle or StreetShares.
Depending on your credit, you may qualify for a competitive interest rate. But people with lower credit scores will likely see higher interest rates — sometimes even higher than the average credit card APR.
Applying for prequalification is a way to see what your potential terms and interest rate may be without hurting your credit scores. Note that prequalification doesn’t mean you’ll receive approval or that your final terms won’t change. And if you submit a full application, your credit may take a hit. But the prequalification process can help you shop for the best potential interest rate and terms for your situation.
How we picked these loans
To develop this list, we looked at major peer-to-peer lenders that work with borrowers across the country. We examined loan amounts, interest rates, fees and other factors to decide which lenders to recommend.