In a Nutshell
LendingClub and Prosper are lenders that offer personal loans with very similar APRs, fees, repayment terms and other features. But LendingClub may stand out for you if you’re looking for a lender that makes direct payments to creditors.| LendingClub | Prosper | |
|---|---|---|
| Origination fee | 3% to 8% | 1% to 7.99% |
| APR range | Competitive to high | Competitive to high |
| Prequalification | Yes | Yes |
| Direct payments for debt consolidation | Yes | No |
| Co-applicants allowed | Yes | Yes |
LendingClub and Prosper offer fixed-rate personal loans that can be used to consolidate debt, make a major purchase, pay for a home improvement project and more.
LendingClub and Prosper personal loans have a number of similarities, so whether one of these lenders is right for you probably depends on your financial goals for the loan.
If you want a debt consolidation loan from a lender that offers direct payments to creditors, LendingClub may be the better option for you.
Both lenders offer prequalification applications to check your potential rate, so that may be the best first step to take to compare any offers you receive. Just remember that a prequalified offer isn’t guaranteed — your approval or terms could change after you go through the formal application process.
LendingClub
If you want to consolidate credit card or other high-interest debt, a LendingClub loan might be a good choice for you. LendingClub has loan amounts ranging from $1,000 to $40,000, and the company may send direct payments to eligible creditors, making it simpler to pay off existing debt and avoid the temptation of using the money for something else.
Depending on your credit, you may qualify for a lower interest rate on a debt consolidation loan than what you’re paying on your existing debts. But make sure that a two- to five-year loan term will work with your budget — those are the only repayment terms LendingClub offers.
If you decide a debt consolidation loan from LendingClub is right for you, you may receive your loan funds in as little as one business day, though funding time varies, and it may take longer.
Read LendingClub personal loans reviews to learn more about this lender.
Prosper
Prosper offers personal loans ranging from $2,000 to $50,000. LendingClub’s direct debt consolidation payments can be useful, but if you have a lot of debt, Prosper may be a better choice for you. Here’s how to calculate debt-to-income ratio.
Make sure you can afford to repay your loan within two to five years — the only two repayment terms Prosper offers. If you can’t, you’ll run the risk of late payments and loan defaults, which may remain on your credit reports for up to seven years.
Once your application is approved, Prosper says it can take as little as one business day to receive the funds in your bank account. (Keep in mind that the exact timing will depend on your bank.)
Read Prosper personal loan reviews to learn more about this lender.
4 best peer-to-peer lenders for personal loansLendingClub vs. Prosper
If you’re trying to decide which lender is right for you, here’s a look at how the two lenders’ personal loans perform head-to-head based on a few key features.
APR range: Tie
Starting APRs from both lenders are competitive, but each lender’s highest rates are much higher than what some other lenders charge.
If you can only qualify for a high interest rate, consider applying with a co-borrower. Applying with a co-borrower who has good credit may help you qualify for a lower rate. Both lenders accept co-borrowers.
Neither lender charges a prepayment penalty, so you can pay more than the minimum due each month or pay off your loan early to help you save money on interest charges.
Prequalification: Tie
Both lenders offer the ability to prequalify, which lets you see estimated rates and loan terms you might qualify for before you formally apply. Prequalification results in a soft credit inquiry, so it won’t affect your credit scores.
But prequalification doesn’t guarantee approval. You still need to submit a formal loan application, which usually results in a hard credit inquiry (and a ding to your scores). Your actual rate and repayment term will be determined after a loan decision is made — if you’re approved — and they may differ from the terms you saw during the prequalification process.
What to consider when applying for a personal loan
Personal loans can be used to pay for many things, including debt consolidation, home improvement projects, medical and dental bills or other major purchases. But factors that influence your monthly payment as well as the total cost of the loan, such as interest rates, fees, loan amounts and repayment terms, can vary from lender to lender.
Since everyone’s financial needs are different, it’s important to review the terms and conditions of a loan before signing on the dotted line to ensure you’re getting a loan that fits your budget.
For example, your monthly payment may be more affordable with a longer loan term, but you’ll pay more in interest over the life the loan. On the flip side, a loan with a shorter term may save you money on interest charges, but your monthly payments may be uncomfortably high. You’ll need to weigh the pros and cons of different loans to find the one that’s right for you.
We recommend searching for lenders that offer the ability to prequalify so you can check rates and compare potential offers from different lenders before you apply.
Not sure either lender is for you? Consider these alternatives.
If you want to get a personal loan, but you’re not sure LendingClub or Prosper is right for you, here are a couple of other lenders you may want to consider.
- LightStream: This online lender may be a good choice for people who have strong credit and want to get a lower rate — LightStream has a rate-beat program.
- Wells Fargo: This bank might be a good option if you need a larger loan amount than what LendingClub and Prosper offer. But you’ll need to be a Wells Fargo customer to apply.