Prosper is an online loan company based in San Francisco. They do not have a brick and mortar store like most banks, and this means Prosper has a much lower cost of business than a normal bank. Operating 100% through the internet means it is cheaper for them to give people loans (no vaults or tellers), so their interest rates are among the lowest rates for unsecured personal loans in the entire United States.
Yet not everybody has a good experience with Prosper. People can apply for a loan and for many different reasons end up feeling feeling upset or frustrated at them. In this article will show the five main Prosper complaints and give some helpful suggestions for dealing with each one.
Complaint #1: Prosper asks you for money or gift cards to get a loan
If somebody claiming to be Prosper asks you to send them money in order to receive a loan, drop contact with them immediately. You are being scammed. Prosper never asks for money, gift cards, Google Play cards, prepaid credit cards, Vanilla cards, or anything else up front.
Prosper never asks for money or gift cards to get a loan from them
One of the ways Prosper makes money as a company is by withholding the fee they charge people from the amount they borrow. So let’s say I borrow $10,000 from Prosper and their fee is 5%. Prosper would subtract $500 from the amount I borrow (5% of $10,000 is $500). They would transfer a $9,500 lump sum into my bank account – yet I still would have to pay back the full $10,000. Does that make sense? Prosper never needs money or gift cards up front because they take their fee by transferring an amount of money to you that is slightly smaller than what you originally requested.
Make sure you are using Prosper’s official website by clicking here.
Complaint #2 – Prosper might deny you a loan
A big complaint people have with Prosper is getting denied for a loan even though they think they have good enough credit, or even though Prosper sent them an advertisement in the mail saying they were pre-approved for a loan. This can be really frustrating, particularly if you are in the middle of a financial emergency and need a loan really badly.
If you do get denied for a loan, try to remember that Prosper is making this decision on whatever current information they have about you. Maybe your credit report changed in between them sending you a pre-approval letter in the mail and when you visited their website. Or maybe Prosper recently raised their minimum required credit score. Prosper has every reason to approve loans to creditworthy borrowers, so some negative factor is probably hurting your approval process.
Thankfully there is a second online loan company in the United States called Lending Club. They have the same kinds of loans as Prosper (up to $40k) and can sometimes have lower interest rates than Prosper. You can check your rate on a Lending Club loan by clicking here (soft credit check; won’t hurt your score).
Complaint #3 – The interest rate Prosper offers you is too high
Maybe you checked your rate on a Prosper loan, and they said you qualified, but the rate they offered you on the loan was really high (perhaps even 25 percent!). Why was the rate so high? The truth is: nobody knows. The formula for how Prosper calculates the interest rate for each borrower is a company secret. It is likely that each interest rate is the combination of a lot of different variables, maybe even thousands of them, so guessing the exact equation Prosper uses is an impossible task.
What Prosper is probably doing is giving you an interest rate based on how likely you are to pay the loan back. So that means we can probably get better interest rates at Prosper by improving the main things that make all borrowers more likely to repay their loans, specifically by improving our yearly income and our credit history. Let’s look at each of these one by one:
Increasing your yearly income
You might be able to get a lower interest rate at Prosper by increasing the amount of money you bring in each year. When you originally checked your rate at Prosper, maybe you only reported the money you bring in from your main job. Maybe you forgot to tell them about the extra money you make from pet-sitting your grandma’s xoloitzcuintli or raking your neighbor’s leaves. Take a few minutes to look over your bank statements. If there are any deposits besides your paycheck, maybe that’s some extra income you can include next time you check your rate. Hopefully your new interest rate will be lower!
Of course, the simplest way to get a higher yearly income is to actually increase your salary. So maybe this is a great month for you to launch that side business you have been putting off for years. Maybe it is time to go and get training in that money-making skill (accounting, HVAC, etc), and get a higher-paying job. Or maybe it is finally time to sit down with your boss and ask for that raise that you know you deserve but have been nervous to talk about. Any of these options will result in a higher yearly salary, and thus a lower possible rate on a loan from a company like Prosper.
Improving your credit score
Your credit score is a really important thing to be aware of. With bad credit you can struggle to get ahead in life, like getting a higher interest rate when trying to get a loan to buy a home, or getting denied for a home loan altogether. In contrast, a good credit score makes you are more likely to get approved for loans, like at Prosper, and the interest rate they give you is more likely to be lower.
Here’s how to increase your credit score:
- Print your credit report
- Carefully look through the report
- Call to correct any errors you find
- Pay back any debt that has gone bad
Downloading your credit report is really easy. AnnualCreditReport.com is the website most people will want to use, because it is the official website all three credit agencies use to give people free access to their credit history. Take an hour to visit the site, download your report, and look it over item by item. If you see a strange loan or strange credit card then you may be the victim of identity theft. This is unlikely to be the case, but it is a possibility. As quickly as possible you need to call the phone numbers on your credit report and get this issue fixed.
The vast majority of people will not be victims of identity theft. For most people, the bigger reason to examine your credit history is to check it for errors and bad debts. For example, my fiance was recently looking at her credit report and a negative mark was on it for a medical bill she paid off months ago, but the medical company never recorded her payment. One phone call later and her credit score went up. Boom.
Take an hour or so and look through your credit history carefully. If you see an error on a line of credit (like a loan or a credit card) that has gone bad, get it fixed or become “current” on your payments. Very likely your credit score will go up, and as a result Prosper could offer you a lower interest rate next time you check your rate on a loan.
Complaint #4 – Your monthly loan payment can be really high
Another problem people face when trying to get a Prosper loan is that the monthly loan payment is more than they can afford. Thankfully, there are a few options to fix this situation:
- Only borrow the minimum loan amount
- Change from a 3-year loan to a 5-year loan
Basically, the easiest way to lower your monthly payment is to not borrow too much money! Only borrow the minimum amount you need. This way, your loan will have the lowest possible monthly payment. I know it can be tempting to borrow more, especially if you think about all the meaningless plastic crap that extra money could buy off Amazon. But if you resist temptation and take out the minimum loan you need, your loan payment will be as low as possible.
A second option is to increase the length of time that you pay back your loan from 3 years to 5 years. As seen in LendingMemo’s loan calculator, increasing the term increases the total amount of interest you pay, but it also lowers your monthly loan payment:
Next time you check your rate at Prosper, see if they give you the option to choose a five-year loan. It will mean paying more overall interest, but it will also lower your monthly payment.
Complaint #5 – Prosper keeps calling because your loan is late
If Prosper keeps calling to say your loan payment is late, the first thing to do is check to make sure your banking information is correct. Maybe you recently moved to a new bank and forgot to tell Prosper about it. If that’s the case, go to Prosper’s website, update your bank info, and you should be all set.
On the other hand, maybe you actually are behind on your loan payments. If you do not have enough money to make your monthly payment, the first thing to do is to breathe. You are not alone. Thousands of folks every year have some emergency happen that they did not expect, and as a result they fall behind on their debts. Feeling shame about your situation will only make you more likely to avoid dealing with the problem.
Next, you need to create a budget for yourself. You need to add up all the money you earn each month, and then add up all the money you spend each month. If you are spending more than you are earning, then that is the problem. You need to find ways to spend less or make more. Either option is enough. Do whatever you can to balance your monthly budget. Remember: the key to all financial health is to spend less than you earn.
As a last resort, try calling Prosper to tell them what has happened to you. Perhaps they have a financial hardship program or something else they can offer you.
Conclusion: Prosper is a great place for a loan
While there is a percentage of people every year who have a negative experience with Prosper, the majority of people who get a loan through them have no complaints. My personal experience getting a loan through Prosper was great (see my review of Prosper). The rates are much lower than most credit cards, the loan itself is friendly (low late fees, a fixed interest rate), and the repayment process was simple since I could pay the entire loan off early without a fee.
Checking your own rate on a Prosper loan takes just a minute or two, and happens through a soft credit pull, meaning it can’t hurt your credit history. To see the rate that Prosper can offer you, click the button below:
Won’t hurt your credit score.