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Updated on Monday, July 28, 2014
LendingClub and Prosper are growing as online personal loan providers, with more and more people shopping for loans with lower rates than their high interest debt, or some spare cash to cover an unexpected situation.
While both are reputable companies backed by management and investors with good credentials, it pains us to see people who shop for a loan and simply chose the very first one that qualifies them. You’re going to want to check rates with LendingClub, Prosper and more.
But before you do, you can read up below on some of the differences between LendingClub and Prosper. While they look the same on the surface, there are actually some big differences to be aware of.
1. Which is more likely to approve you?
The good news is there’s no downside to finding out if both will approve you.
That’s because with an online personal loan you can check the rate you qualify for without a mark on your credit report.
And don’t stop there, because several online lenders are fighting for your business and might give you an even lower rate.
We keep a list you can check here. There’s no harm in trying.
2. Which is better for people with less than perfect credit?
Prosper is a stricter lender by a hair, so if they don’t approve you or give you the rate you want, trying Prosper may get you a different answer.
Here’s a comparison of the bare minimum requirements Prosper and LendingClub have for you to be considered for one of their loans:
Minimum credit score
LendingClub: Not specified
LendingClub is a little more lenient here, so if you’re borderline and get rejected by Prosper initially, give them a try.
Even if both accept you, it’s best to check some other online lenders like Sofi.com, Upstart, or Lighstream to see if you can get a better rate. You can check our list of lenders here.
Debt to Income
Prosper: less than 50%
LendingClub: less than 40%
This means Prosper is sometimes willing to take people who have more debt overall than LendingClub, which is something to consider.
Debt to income includes your monthly payments, including mortgage, credit cards, rent, child support, student loans, car payments, divided by your monthly salary.
For example, if you pay $300 a month on your car loan, $550 a month in credit card payments, and $1,100 in house payments, while your monthly salary is $4,000, your debt to income is $1,950 / $4,000 = 48.8%. That would be acceptable to Prosper, but not LendingClub.
Maximum Number of Inquiries
Inquiries are the number of times you’ve attempted to borrow money in the past six months, and are reflected on your credit report. Prosper is a little more lenient here.
Minimum Number of Open Accounts
Lenders want to see you’ve handled some credit responsibly, so they will want you to have at least two credit accounts open. An account can include a mortgage, auto loan, credit card, student loan, or any other type of credit account on your credit report. Chances are unless you’re very young, you meet this requirement.
3. What information will I need to provide when I apply?
You’ll need to provide basic information like your income, amount of the loan you’re requesting, and employer.
About 80% of the time LendingClub will check with your employer to verify whether you work there or ask for your paystubs to check your income.
When checking your income, they’ll want to see that it’s within 10% of what you stated on your application. So if you said you earn $50,000 a year, and they ask for your last two paychecks they’ll want to see it works out to $45,000 – $55,000 a year in income.
So when you apply don’t put in bonuses, tips, or other income that don’t show on your paystubs if they are more than 10% of your annual income to avoid getting denied by a check.
4. Will I need to tell my life story?
Both Prosper and LendingClub will share your credit profile and loan request with potential people who will fund your loan. But it’s all anonymous and tied to a user ID, rather than your real name.
LendingClub will ask you whether you want to put in some summary information about your loan and yourself, but a lot of people who get approved and funded don’t bother filling it in.
Prosper used to ask you to complete a pretty in-depth profile with a story and picture of yourself, but they’ve moved away from that. So you can stay pretty anonymous when borrowing there as well.
5. How do the rates compare?
Both advertise similar APRs…
LendingClub: 10.68% – 35.89%
Prosper: 7.95% – 35.99%
And the rate you get depends on which of the ‘rating’ bands they assign you.
Those ratings depend on your credit score, total debt amount, the type of debt you have, your payment history, income, and other factors.
In fact, your credit score doesn’t really tell you if you’ll get a decent rate or not.
For example, on LendingClub, of over 700 pending loans on the day we wrote this, here are the interest rates they are charging on loans based on several credit score ranges. (Note this is a little lower than the APR, but it gives you a sense).
Score range: 660-664
Score range: 665-669
Score Range: 670 – 679
Score Range: 680 – 699
Score Range: 700 – 710
As you can see there is a really big range in what they will charge you even with good credit scores.
From 2012 through March 2014, the average LendingClub loan rate was about 14% and the average loan size was around $14,000.
So the short story is – go to both, give them some basic information, and find out where you stand. You might be surprised.
6. What fees do they charge?
While neither charges you anything to check your rate, both charge a fee to complete your loan, and it’s removed from the loan at the beginning.
It works out to 2.41% - 5.00% at Prosper, with the lower fee for people with better credit quality.
Minimum Credit Score
36 or 60*
2.41% - 5.00%
Prosper is a peer-to-peer lending platform that offers a quick and convenient way to get personal loans with fixed and low interest rates. ... Read More
*For example, a three-year $10,000 personal loan would have an interest rate of 11.74% and a 5.00% origination fee for an annual percentage rate (APR) of 15.34% APR. You would receive $9,500 and make 36 scheduled monthly payments of $330.90. A five-year $10,000 personal loan would have an interest rate of 11.99% and a 5.00% origination fee with a 14.27% APR. You would receive $9,500 and make 60 scheduled monthly payments of $222.39. Origination fees vary between 2.41%-5%. Personal loan APRs through Prosper range from 7.95% to 35.99%, with the lowest rates for the most creditworthy borrowers. Eligibility for personal loans up to $40,000 depends on the information provided by the applicant in the application form. Eligibility for personal loans is not guaranteed, and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All personal loans made by WebBank, Member FDIC.
36 or 60
2.00% - 6.00%
LendingClub is a great tool for borrowers that can offer competitive interest rates.... Read More
Make sure you ask for a big enough loan to cover this. For example if you ask for a $5,000 loan and there is a 5% origination fee, you’ll get $4,750 sent your way, rather than the full $5,000.
Once you get quotes from both, you can put the upfront fee and the ongoing interest rate into our balance transfer vs. personal loan comparison tool to see which will cost you more or less over the long term. No need to do the math yourself.
7. What if neither of them approve me?
You’re not out of luck.
The good news is: your credit score isn’t penalized by checking rates with LendingClub or Prosper, so you can try another personal loan lender like SoFi to see if you’re approved or can get a better rate.
Minimum Credit Score
24 to 84
No origination fee
SoFi offers some of the best rates and terms on the market. ... Read More
Fixed rates from 5.99% APR to 18.53% APR (with AutoPay). SoFi rate ranges are current as of September 18, 2020 and are subject to change without notice. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
If your credit isn’t great, OneMain Financial* is a lender that will often approve people with scores below 640, though you’ll need to go in person to one of their own branches to complete a loan application.
And if you apply with OneMain Financial you’ll need to do a full credit pull.
24 to 60
1.00% - 10.00%
OneMain Financial offers quick turnaround times and you may get your money the same day... Read More
Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on your ability to meet our credit standards (including a responsible credit history, sufficient income after monthly expenses, and availability of collateral). Larger loan amounts require a first lien on a motor vehicle no more than ten years old, that meets our value requirements, titled in your name with valid insurance. Maximum annual percentage rate (APR) is 35.99%, subject to state restrictions. APRs are generally higher on loans not secured by a vehicle. Depending on the state where you open your loan, the origination fee may be either a flat amount or a percentage of your loan amount. Flat fee amounts vary by state, ranging from $25 to $400. Percentage-based fees vary by state ranging from 1% to 10% of your loan amount subject to certain state limits on the fee amount. Active duty military, their spouse or dependents covered under the Military Lending Act may not pledge any vehicle as collateral for a loan. OneMain loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z, such as college, university or vocational expenses; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes.
Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.
Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: Florida: $8,000. Iowa: $8,500. Maine: $7,000. Mississippi: $7,500. North Carolina: $7,500. New York: $20,000. Texas: $8,000. West Virginia: $14,000. An unsecured loan is a loan which does not require you to provide collateral (such as a motor vehicle) to the lender.
But if your credit is good, check out these other online lenders to see if you have better luck. Some, like Upstart, will take into consideration where you went to school, your Linkedin profile, or even your grades as a way to make you eligible for a lower rate.
Minimum Credit Score
36 or 60
Up to 8.00%
Upstart is an online lender created by ex-Googlers.... Read More
*We receive a referral fee if you click on offers with this symbol. This does not impact our rankings or recommendations. You can learn more about how our site is financed here.