Lending Club vs Prosper for Borrowers: Four Big Differences

A common struggle borrowers face when applying for a peer to peer loan is choosing between the two major companies: Lending Club and Prosper. From the outside, both look very similar. Both offer great low interest rates on loans up to $35,000. However, there are some key differences between the two that borrowers should be aware of.

To begin, check your rate with both and see which offers you the lowest rate:

Check your rate at both, go with the lower rate:
Lending Club  &  Prosper
Won’t hurt your credit score.

Note: for a detailed look at getting a loan on each platform, you can read my Lending Club Loan Review or my Prosper Loan Review. I got a loan with both Lending Club and Prosper and have explained the process in great detail.

4 Ways Lending Club & Prosper Are the Same for Borrowers

#1. Personal Loans up to $35,000

cashhhBoth Lending Club and Prosper offer the same basic service: the ability to apply for a loan between $2,000 and $35,000. Both the platforms ask you some basic questions about your age, employment, and income. Both check your credit score to see how well you have paid your bills. Finally, if approved, both open your application up for investment from lenders. When funded (and most loans do get funded), the money is transferred to your bank account. You then pay it back with interest over the next three years (or five years).

#2. Better Applications Can Get Bigger Loans at Lower Rates

Both Lending Club and Prosper have ways to improve your result when applying for a loan. Here are three ways to get a lower rate or access to a bigger loan:

  • Have a good credit score. Borrowers with a good credit score get lower interest rates and can apply for bigger loans. Similarly, many negative marks on your history can get your application declined, or only approved for a smaller loan than you might need. Keep updated on your credit report (free credit check here), making sure your history is free from errors.
  • Don’t shop around for a loan. Every time you apply for a loan, you get an inquiry, a somewhat negative mark on your credit. The greater the number of these marks, the higher your interest rate will be. This is because people with many recent inquiries have often been denied for loans elsewhere, and are more likely to skip out on repayment.
  • Don’t ask for too much money. The bigger the loan you take out, the more interest you pay on it. Also, if you ask for a 5-year loan (versus a 3-year), you will pay extra for that as well. Only apply for as much as you need, and try to pay it off in three years. This way you will be offered the lowest rate possible.

lending club and prosper application pages

#3. Borrowers Usually Pay a 5% Closing Fee

Both Lending Club and Prosper charge borrowers a fee to take out a loan (Lending Club calls this an origination fee; Prosper calls it a closing fee). This fee is different for different borrowers, but for most loans the fee is 5% of the loan amount. 80% of peer to peer loans pay this 5 percent closing fee, though the best 20% of borrowers pay a smaller fee: between 1-4% of the loan amount.

You should consider this fee when you apply for a loan, since 5% of your loan will be lost to to it. For example, say you needed $10,000 to pay off credit card debt. You should actually ask for $10,526 since $526 (5% of $10,526) could be taken from your loan by Lending Club or Prosper. The remainder ($10,000) would then be deposited in your bank account.

#4. Loans Are Funded by Real People

peopleOne of the amazing things about peer to peer loans is that they are not funded by banks. Instead, people all over the United States are funding these loans. In this way, Lending Club and Prosper are the same, helping organize this funding as it moves from their bank accounts to yours. When you pay your loan back over time, your payments then return to these lenders in whatever state they live.

4 Ways Lending Club & Prosper Are Different for Borrowers

#1. Prosper May Have Lower Interest Rates

This may change in the future, but for now it seems true. If you apply for a loan on both platforms, Prosper may offer you a lower interest rate than Lending Club. To demonstrate, I checked my own rate on both platforms today.

For a $4,950 loan, Lending Club offered me a rate of 9.71%:

Lending Club Borrower Application

For the same loan, Prosper offered me a rate of 8.69%:

Prosper Loan Approval Sept 2013

This difference of 1.02% is important to note: for the Lending Club loan, this would mean I pay $775 in interest over three years. For a Prosper loan, I would pay $691 in interest. This is a savings of $84 for the exact same loan, a difference that would be even more dramatic if the loan were larger. It is important to point out how my experience between the two platforms may be different than yours (see PeerLender; he gets consistently better rates @ Lending Club). Every application is different.

#2. Prosper Funds Loans Faster (4 Days vs 6 Days)

When I applied for a Prosper loan, I received my money in four business days. I applied on Monday and had money in my bank account on Thursday, just four days later. Lending Club, on the other hand, deposited cash in my account in six business days. Including the weekend, this made it eight days, twice as long as Prosper.

In summary, if you need money fast then Prosper then may be a better option.

#3. Lending Club May Charge Lower Fees

Like we mentioned earlier, both the platforms generally take 5% of the loan as a fee (called an origination fee on Lending Club and a closing fee on Prosper). However, the platforms offer slightly different versions of this fee, especially for premium borrowers. Lending Club offers their best quality A-grade borrowers a fee as low as 1% while Prosper’s is 1.95% (basically 2%). So if you have great credit, you might go with Lending Club. Even this tiny 1% difference can mean hundreds of dollars in savings, especially for big loans.

#4. Prosper Has More Eligible States for Borrowers

Prosper-Loan-Borrower-States

As mentioned in the post Which States are Open to Lending Club & Prosper?, Prosper has more states available to borrowers than Lending Club.  If you live in Idaho or Nebraska, you cannot get a loan through Lending Club, but you can get a loan through Prosper.

Verdict: Both Lending Club & Prosper Are Great

In my opinion, both Lending Club and Prosper are great places to get a peer to peer loan. That said, each platform offers different benefits to different borrowers.

  • Do you have great credit history? You might want to check out Lending Club. They can offer you a lower closing fee than Prosper.
  • Do you need money fast? You may prefer Prosper. They approve loans quicker than Lending Club.
  • Do you have great credit? You may pay fewer fees at Lending Club.
  • Live in Idaho or Nebraska? Even though your state is closed to Lending Club, you can still get a loan through Prosper.

For a closer look at each platform, read my Review of Lending Club or Prosper Loan Review.

You can make this process a whole lot easier by simply taking two minutes to check your rate at both Lending Club and Prosper. After submitting some basic information like your name and yearly income, both Lending Club and Prosper will run a soft credit check that will not hurt your credit score. You then can see the rate that both companies offer, and pick the lower of the two.

Go with whoever gives you the best offer:
Lending Club -OR- Prosper
Won’t hurt your credit score.

[image credits: "Money, Money, Money" by Daniel Borman
"Mother & Daughter" by Rolands Lakis CC-BY 2.0]

Comments

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  1. Karthi says

    Can I apply with both LendingClub and Prosper at the same time just to be safe and not waste time or will it affect either of the approvals and in the end, I get nothing?

  2. Robert Dowling says

    Are there similar sites to Lending Club and Prosper that offer loan amounts greater than $35,000? Thank you.

  3. Michelle says

    What is the turn around time for receiving your loan? I see on their site that things move quicker when you respond to their requests for more information. But my question is, say you submit a request on Monday, “normally” (with prompt responses from me) what’s the longest you’ve seen/heard it can take? Most personal bank loans are approved and the check cut in about a day or two. With Prosper, what’s the basic turn around time?

  4. Bobby Tria says

    I am in the market for getting a loan, possibly through Lending Club, if this happens, will it effect my credit score/rating?.

    • says

      Hi Bobby. Applying for a loan does not hurt your score since they use a ‘soft pull’. Accepting the loan will result in a ‘hard pull’ that will lower your score slightly for a few months.
      Hope that helps,
      Simon

  5. John says

    Soft pull prosper said based on my score they would only do 25,000. Lending club gave a quote for 35,000. Will you know in advance if they can fund it (the whole amount) or will they assume you will take a lesser amount? I really don’t want a loan for a lesser amount.

  6. Deshaun Lathon says

    To initially check is simply a “soft pull” and once the loan is accepted then it will be a ” hard pull” resulting in your credit score dropping slightly for a few months right ? What is the average time before you credit score stabilizes to the original score?

    I also read that the loan is considered an installment loan which means that once paid it will in turn boost your credit score right ? ( above what is was originally )

    • says

      Hi Deshaun. Everything you wrote seems true to me :) Your score will recover from the hard pull within six months to a year, though a record of the hard pull will remain on your report for two years.

      • New Jersey Guy says

        Simon….If the borrower is using the money to pay off debt, they could experience a sharp increase in their credit score in as little as 60-days. This will hold especially true if the money is being used toward credit card debt which is a major factor in determining a credit score.

  7. Kevin says

    Great Article Simon. Im self employed (5) years with a FICO average of 660. (Experian is 673). Has anyone applied and been approved that is self employed by Prosper/Lending Tree? Looking to consolidate and do a few biz upgrades and am curious as to what they will require paperwork wise. Thx in advance.

      • Kevin says

        Thanks again Simon. I was approved by Lending Club for up to $14,000. Great news! But before I accept I was wondering if my actual AGI (Adjusted Gross Income) will be a factor as it is very small after business deductions. My gross is over $90K before schedule C deductions. Any advice? Thanks in advance.

      • Jen says

        Hi Simon,
        I am considering Lending Tree for a debt consolidation loan. I am self-employed (have been for almost 6 years) and am wondering about how the approval/verification process will work. What particular pages of the tax returns did they want when you did it? Also, would I be able to submit copies of 1099’s as proof of income?

        Thanks!

        • Jim says

          PROSPER treats self-employed as second class financial citizens. I put through a request for $350000 with FICO score of 730. Was approved for $35000 @ 10%. During verification they wanted a W-2, which, as a self-employed person (annual income over six figures, 100% verifiable) I did not have. They cancelled the loan (which was 100% funded in about 45 minutes) because they could not “verify income”. I provided tax returns, copies from irs website–everything. Result: no W-2, no loan. However, I was invited to apply as a “self-employed” person. Submitted the exact info, was told that I am now only approved for $15000 @ 14.5% due to my FICO score.

          Hmmmmm– my FICO score was exactly the same when I applied with “employed” status (meaning employed by someone else–you have a W-2 or pay stub). Now I was applying as self-employed, everything changed. Same income, same FICO score, same credit history, same EVERYTHING…but if you are self-employed your PROSPER outlook is not so rosey.

          • says

            Hi Jim,
            This is correct. If you are self-employed, your income is more difficult to verify, and thus you are a riskier investment all around. I wouldn’t consider it means you’re a ‘second class citizen’, more that you are applying alongside a population of borrowers who are more likely to default than everybody else.
            Best,
            Simon

  8. Celeste Gordon says

    I really want to use one of these companies but I’m scared to start the process. I have been trying to pay down our credit card debt but can’t seem to make the headway I want. This looks like a great solution. I guess I’m looking for advice – have others been happy with these companies? Help!

    • Kevin says

      Hi Celeste. I was really apprehensive as well but went ahead and applied with Lending Club on Friday. My loan request was funded shortly after applying. I am just waiting to see if they have accepted all the requested documents I sent them. Simon has screenshots of the exact process here so that was a big help in knowing what to expect. Best of luck!

      • Celeste Gordon says

        Thank you for your response. I am going to get my ducks in a row and get started. I absolutely detest my credit cards. There is a light at the end of the proverbial tunnel. Happy Holidays!

  9. Brenda says

    Hi Simon,
    Thank you for your “plain English” analysis.
    My question is… Can my husband and I apply for one of these loans jointly or would we be better served splitting the loan amount requested and apply separately?

      • Phillip L. says

        That puts me in a bit of a quandry. The credit cards are in my name, and I have the better credit score, but my wife make more than ten times what I make. I suppose we can both apply and compare quotes. Might be an interesting experiment.

  10. Nicole says

    Hey! Thanks for the awesome review! So I’m pretty much flat broke and I travel a lot, and usually have random season jobs, some under the table. On paper I am below the poverty line for sure! Oddly enough, I have a good credit score of 711, having a few credit cards, and I currently am about $5,000 in debt to, but am paying off etc. Anyway, my friend and I have an idea for a new business and I was hoping to get a loan (for $5,000 to $10,000) to get the business started, hoping of a quick return by the end of 2014. Basically my question is, what do you think my odds are of getting accepted for a loan if I can’t show on paper an annual income? Do they ask for papers to prove your income, etc? What do you need to show them?

    Thanks! I really appreciate it!

    • says

      Hi Nicole. I can’t say the odds, but you could always just check your rate and see what they offer you. Checking your rate is with a soft inquiry, so it shouldn’t hurt your credit score at all.

      • Crystal says

        Hi. I have a question, since you said if you check your rate at Lending Club that it doesn’t affect your credit score. What if you tried checking your rate like 5 times? Would it still be considered as soft inquiry? Because I checked my rate on different amounts (like $5000, $10000, and so on). Would it show in my credit report as 5 inquiries, or not?

        • says

          Checking your score is a soft pull and will not show up on your credit history, no matter many times you check it. That said, you probably will get the same rate either way so there’s not much use trying to check it multiple times.

  11. Mark says

    Great article. I recently took out a loan with Lending Club to pay down credit card debt. The amount they approved at the time allowed me to pay down off about 80% of the debt, and lower my monthly payments. As a result my FICO score has improved greatly (now about 750). I’d like to get the rest of my old credit bills paid off, and Prosper is telling me I would be approved. Is there any reason not to do a second loan with Prosper, as this will get all of my old things paid, result in lower monthly payments, and get me completely out of debt faster.

      • Amber says

        So you took a loan out from both companies on the same day and were approved for both? I am asking because I was thinking about doing just that. Any info would help.
        Thanks

  12. Klcreech says

    I have been asked to send copy of my SS card. I find this a little odd. Never needed ever for a loan, so I’m leery of scanning it. Is this common for all borrowers via Prosper.com? And they’re also asking for “bank ownership”?

    • says

      Hi Klcreech,
      Prosper’s requirements are different for everybody, so I’m not surprised by these requests. For Prosper (or anybody who gives out loans) to feel you are trustworthy, they may you to verify yourself with your social security number. This is quite standard, though I’m not sure what “bank ownership” means. Do you mean they are asking for proof that you have a bank account?
      Simon

  13. Amy Davis says

    Hi. I just tried to check my rate on Prosper. I have a FICO score of 715 but Prosper says I’m too low for them. I’m assuming they want a minimum credit score of 720 since that’s excellent credit. Now I feel defeated and feel like Lending Club is the same thing. Any idea, because it doesn’t say on either site. Thanks.

    • says

      Hi Amy. The minimum credit score on both sites is 640, so there must be some other factor in your credit history that is making the platforms deny your application. You may want to check your credit history for any negative marks and see if you can correct them before applying again.

      • suprnova says

        Well I was just turned down from both for a loan of 16,000, you say 640 is minimum, Lending Club just said my score is 655. I’m trying to get a handle on my finances, consolidate all my debt into one payment, as of now I pay out close to 1700.00 a month in credit cards and loans and have for 2-3 years, never late on any but just keep getting turned down. Very disappointed just trying to do the right thing and save some money.

  14. CindyM says

    If I am a caregiver for a family member (re: self employed, no paycheck, no taxes taken out), how do I prove my income?

    • says

      As long as you paid taxes on your income, they may ask you to submit the cover pages of your 2012 return, pages which contain the figure of your yearly salary. Of course, this is different for everyone. Cheers, Simon

  15. ken says

    I got a pre approved letter from Prosper in the mail and applied online, filled everything out and said my loan was ready for funding. And got an email their sending post card for address verification?…i guess im not completely approved yet?…I have not given my bank info, acc# and routing #yet as im leery that they have this info when my loan is not approved yet?

    • says

      Hi Ken,
      You can feel safe about submitting your bank info to Prosper. They are a good loan company with solid site security. They simply need your bank info and an address verification postcard in order to prove your identity (somebody should be calling you on the phone as well).
      Cheers,
      Simon

  16. Arlene says

    I recently received offers from Prosper and Lending Club, actually within a few days of each other. The offer stated that I am pre-approved; however, I am reluctant to apply to either because I do no want to damage my already improving credit. My credit score with TransUnion is 698, with 0 late payments in my entire credit history. The only problem is that I filed Chapter 7 in May, 2011. Do I even have a chance at securing a loan?

    • says

      Hi Arlene,
      I’m not the authority on who gets approval from them, but what I can say is that they have approved people with credit scores as low as 640, as well as people with past bankruptcies.
      Hope this helps,
      Simon

  17. Nothingface5384 says

    I’ve had 2 loans through Lending Club (2nd one ends in a few months). In a few months I may try getting one from Prosper since I’ve been slowly raising my credit score of 600ish to 715. It has been around 715 for two years now.

    What’s the minimum to invest to make it worth putting your money up for loan and get a return percentage?

  18. Jennifer says

    Firstly, thanks for this article. I was really doubtful of Lending Club and Prosper being legit companies. Me and my husband need about $15k to do some debt consolidation. I lost my job a few years ago and we are finally at a point where we are paying things off and have already paid off close to $10k in the last couple of years. I am a stay at home mom and he is employed and made $92k this year with over-time. I guess my question is, can I qualify if I use our tax returns as proof of income? I have the better credit score, mine is 695 and his is 655. The only thing holding my score down is our debt, where he has some old delinquent things on his score. We also each have 6 hard inquiries because we’ve been trying to consolidate this debt for a while. He has applied to Prosper and the max they would give him is $10k. And the interest rate is crazy high!

    • says

      Hi Jennifer,
      When I applied for a peer to peer loan, the tax returns were one way they verified my income, so they may do the same for you. Nice job paying off your debt. I hope a p2p consolidation loan adds some much needed breathing room to your life.
      Simon

  19. Adam says

    I am looking for an unsecured loan for home improvement. I really don’t have a lot of equity in my house( due to home values dropping). I have some questions.
    1. If I apply at both companies can I reject the one that has the higher interest rate or am I automatically locked in the accept?
    2. Will applying to both companies affect my credit scores drastically?
    3. Is there a place on the application to include my wife’s salary? She makes a lot more money than I do, but would to include both of our salaries.

    • says

      1. Yes you can check your rate at both and go with the lower rate – there’s no commitment for just checking your rate.
      2. Checking your rate does not affect/hurt your score. Getting a loan from both companies would affect it, but it would be positive/negative depending on your situation.
      3. There are no joint applications.

      Hope that helps,
      Simon

  20. John says

    Hey Simon. Thank you for the good and easy read.

    I just took a loan out from LC for $7000 and they gave me the rate at 9.98%. It was approved in one day. However, they didn’t ask for any paper verification. They just had me do a phone verification and email verification.

    I will follow up and confirm how long it takes to get the fund to my account.

    Bye bye high interest cc.

    John

  21. Carl says

    I was in business for myself for a number of years, and thus my credit history is only OK (I’m since ‘retired’ and on SS, but I do have some additional income as well). We usually put our purchases in my wife’s name since she has better credit but only supplies about half of the total family income. My question is, can we apply as a couple or should we only use her credit. We want to pay off credit cards as well as provide for a kitchen remodel, so we probably are looking for a max loan.

  22. Nichole says

    I am interested in borrowing money from either Lending Club or Prosper. However, I am concerned about information (my SSI, banking account # and W2) I will provide to these companies. Who will get my information and how is it protected? Since the companies are based on peer to peer investment, how much of my financial information are they given?

    • says

      Hi Nichole. No need to be worried about Lending Club or Prosper’s site security. Both their sites promote the fact that their servers and databases are secure against unauthorized intrusion.

  23. Michael says

    Hi everybody, I am almost sure I am going to be approved for a loan of three years term with Prosper, but my question is, can I pay back the money I received before the end of the term?, let’s say maybe in a year and half or maybe two years to avoid paying more interest? Please help me understand a little bit better about this, thanks

  24. sg says

    Did Lending Club lower their minimum FICO score requirement to 640 recently? If so, is this to better compete with Prosper who has been advertising a lot lately?

    • says

      They did indeed lower their minimum FICO. Why they did this is anyone’s guess. My opinion: both in response to competition from Prosper and opportunity to issue more loans to people. A whole market exists for 640-660 borrowers, and they are keen to figure out how to enter that space as well.

  25. Char says

    My credit is score is in the low 600 with a high debt ratio, but I pay all my bills on time. I do have some old medical bills with neg and in collection. Do think either company give me a loan. Thank you so much for all the advice.

  26. Allison says

    Hi, Simon! Thanks to all the information you have provided I feel a lot more comfortable with peer-to-peer loans. I’m going to apply for the lending club loan but because the future is unforeseen, I want to know what happens if I cannot repay a loan. I plan in using this for debt consolidation/refinancing, and I pay a little more than the minimum on my four credit cards now, but I’d like to get them all paid off and just paying one bill, with a lower interest rate. What are the penalties if, for example, I lose my job and am unable to make payments for a few months? Also, you mention in someone else’s comment that Prosper allows early repayment, but I wanted to verify the lending club does as well. Thank you so much!

    • says

      Hi Allison. Both Lending Club and Prosper allow pre-payment. With Lending Club, you simply have to call them and set it up over the phone.

      As for what happens if you cannot repay, your loan will go into collections. You’ll have a lot of calls from the agency trying to get payments. Eventually you’ll have a really nasty credit score, which will make it hard to get more loans in the future. I would not get a loan if you were doubtful you could pay it back, but also know that it’s not the end of the world if tragedy strikes and you fail to pay the loan back. Peer to peer loans are unsecured, meaning your house or car is not collateral in case you stop your payments.

      Cheers,
      Simon

  27. Sage says

    Hello,

    I have heard that consolidating your credit cards can negatively affect your credit score- is that true?

    • says

      Hi Sage. Everybody’s situation is different, so what I say next is really just my opinion: what many people appreciate is consolidating at a lower rate, which allows them to save money and pay off their debt at a more reasonable calendar. And when all debt is paid off, credits scores often improve.

  28. Gigi says

    I have just gotten an approval of a loan with Prosper and am sending them the required paper work. Does approval and 100% funding mean that they will not come back with a higher interest rate than they offered in the beginning once the documentation is submitted?

  29. Mosa says

    Would it be better to apply for a large loan amount from either LC or Prosper, or divide the amount into two smaller loans? One from LC and the other from Prosper.

    • says

      Hi Mosa,
      The answer to that question is highly dependent upon your isolated situation. I would recommend you consult a financial professional. Personally, I would take out my own single loan because the payments would be in one place, but your needs may be different.
      Simon

  30. Robin Sizemore says

    Not to be nitpicky, but you state, “You should actually ask for $10,500 since $500 (5% of $10,000) could be taken from your loan by Lending Club or Prosper. The remainder ($10,000) would then be deposited in your bank account.”

    The fee would be 5% of $10,500 ($525), and the borrower would still come up $25 short of the $10,000. If the exact amount is extremely important, one should borrow 105.26% (rounded) of the desired amount, or $10,526 in your example. Then they’d lose 5% of $10,526 to the closing/origination fee ($526), and still have the $10,000 loan.

    Other than that, this was a wonderfully helpful article. Thanks!

  31. David G says

    I was just declined outright by Prosper for a debt consolidation; I had pulled current scores and reports from all three bureaus at myfico.com and they ranged from 704-731, with zero derogatories, and never a late payment. I make $113K per year. My credit card utilization is higher than it should be, hence the reason for looking at a debt consolidation loan at a reasonable rate. Only one inquiry, and one new account opened in the last year. Have owned my current home for over 10 years, and 14 years in the same job. I’m completely puzzled.

    • David G says

      In the denial message, they show the same score I have for Experian, 710. I scored lower compared to other members because of my revolving balance (which I expected, but it’s not abnormally high), and get this…too few fully paid Prosper loans. I’d never even heard of Prosper before today…so that last one is actually quite funny.

  32. Chloe says

    You mention that only the inquiry remains on your credit- do they not report the loan on your credit as well? Sorry if I missed this in the article or comments somewhere.
    Thanks!

    • says

      Checking your score is a ‘soft’ credit pull that does not affect your credit score. Actually getting a loan results in a ‘hard’ pull that is reported to all the agencies.

  33. Edward says

    Great article. I have a good credit score (711) but high debt-income ratio. Are they checking for my debt-income ratio also? Thanks!

  34. Randy says

    Once a p2p loan has been obtained:

    * will it show up on your credit report and affect DTI ratio?
    * if so will it show up as a installment or revolving account?

  35. Ray says

    Hi Simon,

    Thanks for a great and insightful blog article. I applied for a loan through Lending Club yesterday and have submitted all of my necessary documents and verification items. When logging into my account my application status is under review and loan status is in funding with 19% of my request funded. When it reaches to this stage does it usually mean that the loan is pretty much going to get accepted or is the process still a long way to go. My loan request was pretty modest and my credit rating through Transunion is currently sitting at 735. Please advise and thank you in advance!

    Ray

  36. Kim says

    I need some help, I’m looking to pay off some payday loans I’ve accrued as well has have a little cushion left over. I’m a single parent with a decent career but my credit score is in the toilet! I know these places won’t approve me, I’ve tried my credit union, etc. Is there any help or am I just doomed? By the way, informative article

    • says

      Hi Kim,
      I can’t give tailored advice to your situation, but many people have improved their credit by paying off old debt through increasing their income and reducing their expenses. Hope that helps.
      Simon

  37. Ed says

    Hi Simon,

    I too was pretty dubious about this, I kept getting pre-approved offers from Prosper in the mail, and just threw them out. After deciding to do some research, I found your article. I applied to Lending Club in the end. Better interest rate on a higher amount to borrow. I have a decent credit score close to 750, however I have A LOT of DTI issues with my two credit cards. Both are almost at their limits, which are high. One is 30K and the other is 23K. I have been reluctant to apply for any credit cards to consolidate because of my DTI, but I pay everything on time and more than required. I also make a decent amount for my job. Do you think it’s likely I will get denied based on this. It worried me after reading one of the blog inputs about someone like me, getting denied for high DTI. I don’t want this to affect my credit score and am wondering if I can cancel. Might be experiencing “lenders remorse”! I just started the process today. Thanks.

    • says

      Hi Ed,
      I can’t comment on your individual situation, but I can say that sites like Lending Club are extremely good at finding a reason to approve people. Their evaluation of a person’s credit worthiness is extremely precise, so if you were able to get a good rate quoted to you from Lending Club, they likely took a cursory look at your DTI and found it within their risk tolerance. If you got a good rate from them, I find it a distinct possibility you could get this loan, and moving from credit cards to a fixed-rate installment loan like these seem a very positive change for almost everyone who does it.
      Hope things work out,
      Simon

      • says

        Thanks Simon, I guess I had no need to worry I was fully funded by one investor within an hour of applying for quite a large amount at an excellent APR. Much better than my credit card which is stupidly high! Thanks for your reply and I hope to pay this off quicker than the three years. Yeah!! Reducing debt. Really appreciate your comments and comparisons of the two companies.

  38. Bruce Williams says

    I currently have a loan with Lending Club. Easiest loan I have ever gotten. The lending club was courteous and friendly. My question is: can I add to my current loan? And if so, change the pay off years from 3 to 5?
    Thanks, Bruce Williams.

  39. Enyko says

    I’m a small business owner and have yet to file my 2013 taxes. Will this be an issue? Do they require tax returns to verify income?

    How do they verify income? Although I take large monthly draws from my business account, my salary is low. Will they look at both salary and draws?

    Thanks

    • says

      I cannot speak to the particulars of their income verification, but I can say that W2 verification is pretty common. If you’re self employed, then previous tax forms are pretty standard. But your process may be different.

  40. Christy says

    If you don’t get funded at 100% do you have to accept the loan? For example if it is 70% funded can you decline it?

    • says

      It depends on the platform. Lending Club has, in the past, allowed people loans who only got 70% funding. However, it seems *all the loans are currently reaching full funding (if they complete verification/approval), so I wouldn’t worry about this question.

  41. DivorcedDad says

    Hi all. Wanted to sum up my experience with both to reiterate Simon’s statements. I had a grueling divorce which left me holding the bag with high debt. I had low score (655) because I could not get a handle on two households and income. I applied for a loan at Lending Club and loaded all the documents they requested. Loan was for $10,000. It was in my account within 4 business days.

    I just applied for a loan with Prosper and was approved up to $35,000. I have loaded all documents and it is has been idle for 3 days but fully funded as they verify documents. I did place a call and they are highly busy with application verifications and assured me they would be as quick as they can but have overwhelming volumes. I understand completely and will keep everyone posted.

    Both sites are reputable and pull money direct from bank account. One down side to Prosper is that Lending Club allows you to make a one time change to your payment date, which is very helpful to align up to payroll, especially when you get paid twice a month and first check goes to house bills. Prosper is looking to do something similiar in future. In the meantime after your first payment you can change to manual payments, but it still doesn’t fix the date issue.

    Hope this helps everyone. I would recommend everyone check your scores from AnnualCreditReport.com to ensure there are no derogatory marks on your account. Prosper looks at the last 12 months, so this will save you time or dissappointment when applying and being denied. Rate check will usually check that for you though.

    Good luck all and goodbye to high debt!

  42. Kimberly says

    I have a lending club loan but I am wanting to do some house improvements so I want to get a loan with propser. Can I do that do? I have excellent credit 748 with only 2 credit cards and vehicle loans.

    • says

      Hi Greg. I have no idea. Lending Club & Prosper have both approved loans for people with past foreclosures, but as to your specific situation I recommend you check your rate with both and see what they say.

  43. Olivia says

    Hi do you know if Prosper and Lending Club report to all 3 credit bureus? The loan I am considering about refinancing, only reports to 2 bureus, its alittle furstrating. I undestand the closing fee structure however do you know what is the lowest interest rate each company offers on the term of the loan? I keep seeing 7% but is that the lowest?

  44. Tom A says

    Are you aware of any transactional lenders that can fund an initial escrow? The funds do get utilized, but only upon completion of a “buy/sell” transaction. The funds required are about $500-650K, but funds can be controlled by lender.

  45. Caleb says

    I am trying to get a car for $55k. I have a solid income and above 640 credit score, but I am a first-time buyer. The dealership said they would let me auto finance for $26k. Would it be possible for either lending club or prosper to loan me the remaining half?

  46. Jason says

    Good morning Simon. I’m sure you have answered this same question dozens of times, but I’m going to ask again. What paperwork should I submit when Prosper requests bank ownership verification?

    Thanks in advance.

  47. Chase says

    Does anyone have experience with the lending club funding process? Yesterday my loan was at “approved” status with 5 days remaining and funding at 0%. This morning status still shows “approved” and funding at 0%, however the remaining days have increased to 28 days and 17 hours. Any insight on funding timeline here?

  48. Elizabeth says

    I’ve been trying to apply through prosper for a loan to build a tinyhouse but since I’m technically unemployed I can’t get approved. I have the good credit but am currently stay at home mom with a baby and my husband is the one working on building his back up but has the income. So will we just have to use his to get approved…possibly get approved I mean?

  49. Dean says

    Simon,

    I am considering a personal loan from LC or Prosper for the simple reason of adding cash to my personal investment account, then pay my sons college expenses next year when he starts. Any idea if the reason for the loan is a factor, or do they primarily fund card consolidation reasons only?
    Thx

  50. Ralph says

    I was just approved with a credit score well over 700 @ 12.64% (16.26% APR) on a 12500, 3-yr loan. It was considerably more if I took more or went 5 years. I’ll stick with Bank of America’s Credit Card @8.25%, Discover’s 9.24%, and others under 10%. I’d like to know if I can invest my IRAs (and eventually other retirement money) into peer-to-peer type of lending, and if so, how one would go about it.

    • says

      Thanks for sharing Ralph. While most people do get a lower rate at Lending Club and Prosper, some will have better cheaper options elsewhere, and it sounds like you’re one of these people.

  51. Christine says

    My husband was 100% funded threw lending club but then was denied due to income ratio with high debt, I was able I get a loan from them and consolidated about 8,000 of his debt into my loan. We paid off the remainder of our car balance and 4,000 in just his credit cards. How long till he can reapply? We still have some debt that we would like to consolidate and make just 2 easy payments and save money from high interest credit cards. Would it be better if he tried prosper and should we at least wait a month till they report on credit his score was a 669 when they pulled at lending club.

    • says

      Hi Christine. I can’t speak to your particular situation, but some borrowers have gotten approved through Prosper even though they were denied by Lending Club. Hope that helps. Simon

  52. Laheta Williams says

    Both Lending Club and Prosper give loans up to $35000, I need $70000. Can I get a loan from both of them at the same time?

  53. Kris says

    I noticed both companies fund their loans through WebBank in Utah. Are the companies affiliated in any way? Can you apply and have loans with both companies at the same time?

  54. Mr derrick says

    Do you need a loan to Finance your Business or for personal purpose if yes
    email me at: cashstationderrick23@gmail.com for more info .
    Note that you are to fill the form if you are interested for the loan

    BORROWER’S INFORMATION

    Full Names:
    Phone number:
    Contact Address:
    Gender:
    Age:
    State:
    Country:
    Amount needed as loan:
    Loan duration:
    Occupation:
    Monthly Income:
    Have You Applied Before:
    Do You Speak English?

    We wait your response to provide you with the loan terms, repayment and conditions of the loan for processing.

    Mr Derrick

  55. Rhonda says

    Like most on here, I received offers from both Lending Club and Prosper. I have credit card debt I would like to consolidate, only if the interest rate is lower. My credit score is 685-701 (depending on which they check); however, just my debt-to-income ratio is around 72%. (I do not have any delinquencies on my credit report and all of my bills are paid on time.) This is with my existing mortgage and just my income. With my husband’s income it is down to 50%. This also is with my current payment on credit cards of $950 a month. A couple of questions. 1. Do they count your existing mortgage in your debt-to-income ratio? I have read somewhere they do not. 2. Will that debt-to-income ratio make me ineligible? (I realize you cannot answer 100%, but close?) 3. Do they take out the credit card payment when they look at d-t-i? 4. Is it possible that I am eligible for offers with the soft credit pull but they would deny me with a hard pull? I have build my credit up and do not want it to take a hit if I would have a chance of being denied. Does this make sense? Thanks in advance for your advice/input.

  56. Neil says

    Hi Simon, I wanted to know if during your research of Lending Club. Has anyone asked you to pay a insurance fee of $115 to American National Insurance. In order to cover a non payment of the monthly installment due to a accident or serious emergency that cause several missed payments.

  57. Liz says

    Hi Simon,

    What a huge help – thank you!
    Question: If I have a few extra dollars every month, is there a penalty for making slightly larger payments? How would that work in the long run?
    My credit is 768, I have approx $100k in credit (4 cards), two have a 0 balance, one has approximately 14k balance, and the last 27k balance. I haven’t missed payments, and often times pay more than the minimum (though sometimes cannot). I make approx 2k/mo as a part-time public health nurse. I need to borrow the max for the max time avail, and soon… What’s your word on this, if you’re willing? Any thoughts on who may offer a somewhat greater-sized lain for a longer period of time?
    Thanks so much in advance :)

  58. Connie says

    I also had received several mailings from Prosper and decided to check into things further. So glad I came across this site. I applied with Prosper just to start and received an excellent offer. We will see what happens over the next few days. It appears it can take up to 14 days for some loans to receive final approval. Does the rate we have been initially offered (pre-approval) change if person(s) don’t come forward to back your loan?

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