What to Expect When Applying for a Personal Loan on Prosper

[Update: Here is an updated article with a new video about the loan application process at Prosper.]

Last week, for the first time, I took out a loan on both p2p lending platforms. Today, I am going to be sharing my experience of applying for a loan on Prosper. The process was relative smooth and painless, taking about 10 minutes to complete.

For p2p investors I think it is important to have some understanding of the borrowing process. This is really the reason I undertook this exercise. I didn’t actually need a loan but I have been investing in p2p loans now for over two years and I have always felt that my education was somewhat incomplete without going through the other side of the process.

I have created a video of the actual application process. This walks you through the different screens and lets potential borrowers know what to expect. It runs just under 7 minutes and if you are looking to obtain a loan on Prosper I highly recommend you watch the entire video.

Obtain Your Interest Rate Quickly

A couple of points I want to highlight about the application process itself. You can find out your interest rate pretty quickly. Once you have entered in your personal details (including social security number) you will get to a screen that displays your interest rate. Prosper does a soft pull (meaning it will not impact your credit at all) of your credit report on the fly and is able to display your rate instantly. Now, this doesn’t mean you will be approved for the loan but your rate will not change from this quoted rate.

Now, you are under no obligation to accept the terms that Prosper offers to you. I was quite surprised that my own interest rate was basically the maximum rate (31.99%). When I asked Prosper’s head of risk management about this he pointed out that the self-employed are treated with extreme caution under Prosper’s risk algorithms so that skewed my rate really high. It might also have something to do with the fact that I don’t have much income at all right now apart from investment income.

For those curious about my listing here is a link to it. I chose a small amount of $2,500 and I deliberately included only the information that was mandatory. No loan description, no financial information and nothing for an investor to go by other than my obscure loan title: “Small loan”. Despite that my loan was funded within 24 hours, although I did use my wife’s account to kick start the funding by taking 30% of the loan. But this was obviously a loan that investors liked (even though I provided no details) because it was funded very quickly.

Of course, the work wasn’t finished when I completed the application process. I had to go through several verification stages before my loan could be issued but within 24 hours my loan was on the platform. The reason for that delay is that Prosper has to notify the SEC about every single loan and that it is going to available for investors as a security and this takes time.

Five Days from Loan Application to Money Received

The entire process was quick and easy. From the time I started the process until the loan money was in my bank account was just five working days. Here is a timeline with some of the steps involved:

Mon 9/12 – Applied for a loan on Prosper.com
Tue 9/13 – Loan is active on the platform for investors
Wed 9/14 – Loan is fully funded by investors
Thu 9/15 – Prosper emailed request for documents (driver’s license, copy of a voided check)
Fri 9/16 – Phone call from Prosper verifying personal details
Fri 9/16 – Loan issued
Mon 9/19 – Money appeared in my bank account

I was very impressed with the speed at which Prosper went through this process. I helped the process along by being very responsive, getting back to them within an hour of any request. I was also available to take their phone call which also helped speed things along. That phone call was very thorough. They wanted to know all the standard information such as data of birth, address, social security number and credit numbers. But they also dug a little deeper by asking for my monthly mortgage payment and balance. Overall they asked at least a dozen questions.

What was curious to me is that phone call was made around noon on Friday. Within two hours my loan was issued. They said it would be 3-4 days before I saw the money in my account but it was in there this morning less than one business day after that phone call.

I will be paying this loan back early, I certainly don’t want to be paying 32% in interest for very long. But I will wait at least a couple of months just to see how the rest of the process works and to give my fellow investors some return on their money.

Now, if you want to take out a loan on Prosper then I encourage you to use this link (it is an affiliate link). Later this week I will be reporting on the loan application process with Lending Club.

Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech.

LendIt Fintech conducts three conferences a year for the leading fintech markets of the USA, Europe, and Latin America. LendIt also provides cutting-edge content all year long via audio, video, and written channels.

Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series.

Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.

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LC Joe
Sep. 19, 2011 11:46 pm

, I am a little shocked (is it possible to be a little shocked?). 31% APR for someone with excellent credit seems (is) a little (a lot) high (usurious). No?

Dan B
Dan B
Sep. 20, 2011 3:30 am

You just couldn’t leave that entire loan sitting there could you? I just want you to know that if you ever do a post on your wife’s Prosper account that I’ll be (probably the only one an*l enough here) to expect a 0.1% or whatever downward adjustment to the ROI numbers to reflect this self investment. 🙂

Haris
Haris
Sep. 20, 2011 6:53 am

Yikes! I know that you are doing for demo purposes, but why I should get a prosper loan if I can just do a cash advance on my credit card with a much better rate? 31% it is not hard to beat with credit cards. Not to mention the countless 0% offers.

John Gonzalez
John Gonzalez
Dec. 3, 2014 12:26 pm
Reply to  Haris

I couldn’t agree more. But that is how I got into high credit card debt in my early years of marriage so we could get all the vital things any family needs starting out. I just thought of it as the loan that the banks or credit unions would not give me and my wife.

Bilgefisher
Sep. 20, 2011 7:33 am

Peter,

One thing to note on your loan. Your credit score was through the roof compared to 99% of the HR loans. All your details except self employed were probably very favorable to many investor’s criteria.

Jason

Roy S
Roy S
Sep. 20, 2011 10:45 am

I think an additional reason your loan funded so quickly is that you started the loan out 30% funded. I think there are a lot of people who invest in loans further along in the funding process. When you start factoring in investors, like worthblanket, who are funding 30, 40, 50% or more of certain loans I think there are a lot of people who just ride the coattails of those loans. I would attribute it to people thinking these other investors know something they themselves do not know, or they don’t want their cash sitting around not earning interest, or any number of other reasons for it. Of course, for those who have a strategy of picking and investing in loans, regardless of the funding from other investors, that included your loan: Kudos!

Dan B
Dan B
Sep. 21, 2011 9:31 am

Peter……You have an investor account or 2 at Prosper. Has it been your experience with those accounts that funded loans get issued as quickly as yours apparently was? Because it certainly wasn’t my experience during the short time I was with Prosper earlier this year. I recall “several” instances where fully funded notes sat for days on end without being issued……………..& a few times when they didn’t issue for over a week.

Roy S
Roy S
Sep. 21, 2011 2:42 pm

@Dan/Peter, I think Prosper needs to address the issue of fully funded loans sitting for days. If the issue is on Prosper’s end, then they need to remedy it. If it is on the borrower’s end, then one of two things should be done to correct this issue. Either there should be a greater step initially taken by the borrower prior to the loan being listed on the platform or there needs to be a shorter time frame given for unresponsive borrowers.

My hope is that the delay is simply Prosper doing their DD on borrowers who may be flagged (for reason or at random) for further information verification. I would rather have a little delay on a few loans and lose potential interest than have no delay and suffer from higher default rates. I think a lot of people (myself included) focus on the things that directly impact them now rather than trying to focus on what is beyond it. I’m giving Prosper the benefit of the doubt here, but it is frustrating waiting and losing interest.

david
david
Dec. 8, 2013 12:16 pm

I am particularly appalled that ANYONE could pose as an investor and phone you for copies of all your personal information. I am also shocked to note their terms that even in the event you prepay early one must still pay the total interest rate that would have existed had the loan gone through maturity; for instance i went through the process and didn’t complete and saw my request for $4000 end up wit $2k+ in interest all of which I’d have to pay even if I balance transferred early (lol. forgive the profile pic that’s my grandaughter from when I set her up on an avatar system so she could contribute as an author to a website i once operated)

david
david
Dec. 12, 2013 1:43 pm
Reply to  Peter Renton

Thank you peter i ultimately did phone them and it is as you say–the info I responded to was from sources such as this–obviously a misunderstanding. As you were all noting, though, my loan got funded fast and i have uploaded the info they requested and it is going on a week now and funds still haven’t transferred and the website indicates they’re still waiting this information; I did contact personally and was told the system wasn’t always in sync with reality

bruce
bruce
Jan. 28, 2014 4:24 pm

Watch out for this company. I have a loan with them and have been having trouble with them processing my payments when authorized. One month its processed when authorized and the next it showed that 5 days later. I called them and they would never quite explain the reason. They just kept coming up with excuses…

Jennifer
Jennifer
Apr. 9, 2014 2:34 pm

I tried to sign in to my account today, but found out it is closed. I submitted all docs as they requested, and I got 100% funding in 2 days. My credit score is 710. Anyone knows what happened ?

sherry kahn
Apr. 14, 2014 11:36 pm

Good evening:
I am Sherry Kahn…I have applied for a loan just like you posted on the video. I have applied for $2500 to move home to Florida. My family wants me home , and I Have saved $2320.00 for about a year. My credit score is 656 at the moment and I can payoff off two small credit cards ($386.00) that I have incurred. I have a new granddaughter I miss very much and my daughter as well. Any other suggestions would be greatly appreciated.

Sincerely,

Sherry S. Kahn

Timothy T
Timothy T
Apr. 23, 2014 11:12 pm

I was hoping you could clear this up for me. Lets say I got a $2,500 loan. If I pay it off in six months, what do I end up paying in interest?

Carlos A. Piñero
Carlos A. Piñero
May. 17, 2014 8:27 am

If I pay ahead of time do I need pay all interest ? Or will it lower my interest compounding?

Gary
Jun. 1, 2014 11:23 pm

Hey Peter, great site and helpful information… Thanks for the postings and tips.

Just wondering if it would be difficult getting a loan to buy a building? I know it’s an open ended question, so I will try to clarify. For 30 years our business has always rented a building for tax purposes, etc. Well know that I’ve hit 60 years old (hopefully smarter) and have a nice piece of property, I am planning on putting up a metal prefab to replace our 2500 sf building in a commerce park. I am tired of paying a landlord and can easily cover a $2000+ monthly loan payment. I am smart enough to know your need OPM when in business, so I think the loan idea on Prosper or LC is a way to go (deductible, expense, etc).

What is the max of a loan on one of these places, I am thinking we will spend $40K and was planning to pay back in about 24 months. My credit is good, the business is solid and I have never missed a payment on a single loan or credit card.

Thanks for your thoughts….

Kevin
Kevin
Jun. 14, 2014 6:04 am
Reply to  Peter Renton

Peter, I went thru the first part of applying for a loan after I got my pre approved offer and personal offer code. What am I waiting for now? Can you help me with what peer to peer means and what I need to do now that i have done the online initial paperwork I had to complete? Thank you much
Kevin

Kevin Kurtz
Kevin Kurtz
Jun. 25, 2014 7:19 am
Reply to  Peter Renton

Peter, after I emailed them the documents they required, it took two days and the money was in my account. It was awesome!! Thanks for your guidance.

Sylvie
Sylvie
Jun. 10, 2014 7:24 pm

Hi Peter!

My husband received a preapproved offer. We don’t own a house; we rent. can we still borrow $$$?

sylvia menchaca
sylvia menchaca
Jul. 14, 2014 12:05 am

Would like to know more about getting aloan I need $1800 asap

chris
chris
Aug. 20, 2014 1:51 pm

Peter,

How do you pay of a loan early if they simply take the money from your account?

Chris C.
Chris C.
Sep. 13, 2014 1:44 pm

These people (Prosper) are ridiculous. I was looking for a loan to consolidate my credit cards into a single payment. My bank has already offered me 10.99%-11.99% and enough to cover all of my credit cards. I have good to very good credit, an above average income, and am NOT self-employed.

Bankrate.com listed Prosper as starting at 6.73% and averaging 9.49%, so I figured I’d put my information in and get a quote. They might even be able to beat my bank. I seriously wondered if the computer had made an error when they wanted to offer me half of what I asked for and at 31.98%. That’s 50% more than I’m already paying. Consolidation loans are supposed to DECREASE your interest rate, not INCREASE them 50%. Why would I take out a loan to pay more money than I’m already paying?

I suspect that the 6.73% is a come on and that no one is ever offered less than 30%.

Michelle
Michelle
Nov. 1, 2014 11:08 am

Hi Peter,

I found your post to be extremely helpful. What is your opinion of the possible funding percentage rate for a 30k loan for sometime with a good credit rating, as viewed from an investor standpoint? Most of the referenced amounts here are for lower ones, so I am interested in knowing if the funding quickness & success rate is comparable to what you experienced.

John
John
Nov. 5, 2014 12:33 am

I have a loan funded with Prosper and in stage 1 verification. I sent all the requested items today and it is in review status. I checked Lending Club and now find that the interest rate they offer me is about 3% lower than Prosper.. Last time I had checked they were 2% higher. Is it possible to cancel my loan application with Prosper since I haven’t received money and go with the lower rate or am I locked into my Prosper deal?

d
d
Sep. 7, 2016 11:12 am
Reply to  Peter Renton

how do you do this if loan is fully funded? The option to withdraw is no longer visible

MyselfO
MyselfO
Mar. 26, 2015 1:00 pm
Reply to  John

Were you able to cancel the loan application? On Prosper’s website, they say you can only withdraw your application if the loan is still in funding.

I also applied recently, the loan funded quickly and they requested documents. I wonder what happens if i don’t submit all documents and wait for the it to expire. I have already submitted proof of income though so I am not sure how much weighs on that. I plan on not verifying the address or bank account until I figure out what my options are.

Kathi
Nov. 21, 2014 2:18 pm

I applied for a loan, had total funding. Sent them all the paperwork they requested. However, when I applied I put in what our current household income was. I was asked to submit my W2 to show proof of annual income. Our W2’s from last year showed we made almost 130,000. Do to the fact my husbands employer closed and he is now working a new job he is making less. I had all funding at our current household income which is less then the W 2’s. I explained this to them but they canceled my loan because I could not show proof of this. Not sure how that works. I was honest from the beginning by stating the lower annual income and the W2’s showed more. Not impressed with this company.

ljs41568881
ljs41568881
Jan. 4, 2015 12:44 pm

I am applying for a Prosper debt consolidation loan. I also checked out Lending Club. LC would give me less than half of my request ($20k) at 10+%. Prosper offered all of the amount at a bit over 6%. My only downside as a borrower is high debt to income. I am fixing up my home to sell in the next few years so most of the debt is house-related. Wells Fargo, where I have a credit line, turned me down for an equity line two years ago. As much as I would like the tax write-off, I am unwilling to go through that process again if I can get an equivalent non-deductable rate. So far the process with Prosper has been smooth and efficient. The holidays may have slowed things down a bit, but after 4 days the loan is over 50% funded. The difference in responses from the three lenders is interesting. I own shares of LC. Do I feel more confident because LC is a more conservative lender or do I think based on my application that they are missing opportunities?

Lisa
Lisa
Jan. 29, 2015 6:29 am

I just received my money from Prosper. The whole process took 7 days from start to having the money deposited into my account. Smooth and simple. We spoke to them once on the phone just to verify everything. No snags, no lies, nothing, EVERYTHING was on the up and up. Nice people, simple process, good company to deal with.

cheryl
cheryl
Feb. 4, 2015 2:05 pm

how does prosper handle someone that has filed bankruptcy about 6-7 years ago but has paid everything on time since then

Cyndee
Cyndee
Feb. 18, 2015 7:23 am

Hi Peter,

You’ve provided quite a bit of information here and I like what I’m reading so far.
A little over a year ago I found myself needing a small loan to get myself ahead. I made the worst decision ever ( I didn’t know at the time ) I went on line and applied for a payday loan. After I submitted my application 10 to 15 phone calls a day came pouring in from lenders. They were calling my place of employment non stop. I ended up receiving one payday loan- taking out another one to pay the first one and the vicious cycle began. The calls never stopped offering more loans. I ended up with 9 payday loans and my weekly check which averages a $1000 a week was paying nothing but interst on the loans. My entire paycheck was taken out of my account every Friday for the interest. I finally broke down and went to my credit union for help. Luckily they gave me enough money to rid of the loans. My loans were sold to other lenders repeatedly and it took another 3 months to pay them all off due to I didn’t know where my loans were at.

My question for you is: does prosper call my employer and do they sell your loan and information to other lenders?
I started the application process with prosper and when it asked me for employers phone number I immediately logged off their site to do some investigating.
Another question is: what documents are they requesting you to email them?
I’m so cautious now with my past experience of putting my information on line now.

Milly
Milly
Mar. 19, 2015 12:37 pm

HI Peter! Thanks for your information, I have I little questions. I was received the letter and pre-approved and called, they taked the informations but the answered to me, I will received the answer in 30 days, do you know why? Is something wrong.

Thanks for your help!

Milly

Jennifer Shaw
Jennifer Shaw
Mar. 26, 2015 6:15 am

Borrower beware! Prosper is unreliable at updating their records and credit reporting agencies. I phoned Prosper and made a manual payment to pay off the remainder of my balance owed for a loan. Three months later my credit report shows that the remaining balance is delinquent! When I log into my prosper account, my account STILL shows the amount past due plus interest is owed. After calling them and fighting with them, the only response I got was an email confirming that I paid off the final balance. My credit report still has not been updated from this error since 2012!

Joshua Twomey
Mar. 30, 2015 12:55 pm
Reply to  Jennifer Shaw

Hi Jennifer,

Apologies for the terrible experience. I’d like to assist in resolving this issue for you. Please call me directly at 415-593-5423. I look forward to speaking with you.

Regards,

Joshua Twomey
Customer Experience Manager

donald tindle
Jun. 8, 2015 5:10 pm

I applied for a loan and it was funded 20 minutes after posting. They wanted a copy of my drivers license, I sent it 5 times before they said they received it, now it says in review. What does that mean.

donald tindle
Jun. 12, 2015 10:17 pm
Reply to  donald tindle

I’m responding to my post above. The reason I had to send a photo 5 times is because my phone was not taking a good quality photo. I used my wife’s phone and sent a copy of my drivers license on June 9th. June 10th I called Prosper and they said everything looked fine. June 12th 8:30 AM prosper called me to verify my info. 3 hours later at 11:30 AM loan was approved. Thanks Prosper, the employees I talked to were very friendly.

michael
michael
Jul. 4, 2015 8:20 am
Reply to  Peter Renton

What does it mean if it says excellent no documents required? I can’t submit and documents

HELP

Richard
Jul. 29, 2015 8:37 am

I have applies and have been approved. What documents will I be needing to send when my loan is funded ?

Richard

Ahmad
Ahmad
Aug. 6, 2015 10:16 am

It works if your name is John or Nancy. For people with my name, no matter what document you submit, they will reject it, even if you have a 800+ credit score. Even if you’re an American citizen.

Mikey
Mikey
Mar. 7, 2016 12:33 am

I applied off of a pre approval and my account has been pending activation for a couple days. What does this mean? Do i need to submit anything? It says that I don’t need to submit any documents.

Joy
Joy
Mar. 22, 2016 7:45 pm

Hi,

I just applied for a prosper loan for debt consolidation. My loan is fully funded and prosper have asked me for documents for verification. I have sent the documents. But now I want to cancel the loan. is it possible to cancel the loan now, and if I do will it affect my credit history/score?thanks

Joy
Joy
Mar. 22, 2016 7:54 pm

Hi peter,

I want to know if I can cancel my loan with Prosper during verification stage 1? please let me know. thanks in advance for your answer

Joy
Joy
Mar. 23, 2016 3:11 pm
Reply to  Peter Renton

Hi Peter,

thanks for your reply.unfortunately I got an email today that my loan is cancelled (reason is unknown). In an earlier email yesterday they told me to resubmit some of the documents. but the loan is cancelled even before I get the chance of resubmitting them and the worst part is that I don’t know the reason (my online account is suspended too). I called the customer service and they couldn’t tell me of any reason why the loan is cancelled.Really disappointed with Prosper!!! I would appreciate your thought on this. thanks in advance

Bradley
Bradley
May. 20, 2016 7:51 am

I applied for a loan with prosper on May 11th. All my documents have been approved, they keep telling me they are trying to find someone to fund the loan. The loan was for $25,000. They said it could take up to 14 business days. I don’t have 14 business days to wait. If I withdraw the loan request can I resubmit another lower amount without it affecting my credit score? And why is it taking so long to fund, I see that people with small amounts are funded within a few days. Thanks

Allen
Allen
Feb. 13, 2017 8:13 pm

Hi Peter,

I found your post to be extremely helpful. I downloaded some Prosper listing data just now and had a quick look at it. I found there is one variable called months employed. This variable can take negative values. Do you know what does that mean? Thanks.

John
John
Dec. 8, 2017 1:09 am

Really curious how you find out what your prosper rating is. I submitted my documents and they called me to tell me they updated my income. Which is lower. They said I will receive an email in 24 hrs. Sounds like I’m being denied.