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Updated on Friday, April 17, 2015
If you’re torn between choosing SoFi or Prosper, SoFi is likely the better choice. The biggest selling point is that SoFi offers lower potential interest rates, which can make a big difference in how much you pay to borrow over the term of your loan. And SoFi charges no upfront fees like an origination fee, unlike Prosper.
That being said, SoFi’s minimum credit requirement is higher than Prosper’s — requiring a score of at least 680 vs Prosper’s 640. So it’s slightly more difficult to qualify for.
The key before you borrow is to compare your loan options to be sure you’re getting the absolute best deal. We’ll take a closer look look at the similarities and differences between SoFi and Prosper’s terms below.
Comparing the terms
As you (hopefully) have good credit, you should be looking to score the lowest rates possible. Which lender has the better APR?
SoFi’s current fixed APR range is 5.99% to 18.53% with its autopay feature, which allows for a 0.25% interest rate reduction as long as you allow the lender to deduct monthly payments directly from your bank account.
Prosper’s APR range, on the other hand, is higher, at 7.95% to 35.99%.
That’s quite a difference, but remember that Prosper is a peer-to-peer lender. The loans are a bit riskier for investors to take on. If you have excellent credit, you’ll be looking at the lowest rates offered, so don’t be alarmed by the high end of the spectrum.
SoFi offers loans ranging from $5,000 to $100,000, and Prosper offers loans ranging from $2,000 to $40,000. This makes SoFi the obvious better choice for borrowers looking for personal loans that exceed $40,000. SoFi also offers terms of 24 to 84 months, while Prosper offers loans for 36 or 60 months.
One big difference to note between the two lenders is that Prosper charges an origination fee on its loans, while SoFi doesn’t. Depending on your credit score, you’ll be charged anywhere from 2.41% - 5.00% by Prosper. That means you’ll receive less money in the bank, as the origination fee is taken out before disbursement. Be sure to factor in the origination fee when you state how much you need to borrow.
Credit score minimums
To apply for a loan with Prosper, you need a minimum credit score of 640. When you post a listing for a loan with Prosper, your credit is not affected. A credit inquiry will only be conducted if your loan is funded by investors.
With SoFi, you should generally have a FICO Score of 680 or higher. The lender takes other factors into consideration, including your career experience, repayment history and monthly income versus expenses, but the higher your score, the better. If you have a strong repayment history, that will make you a more attractive borrower.
When you initially apply for a loan with SoFi, there will be a Soft Pull on your credit, so you don’t have to worry about your credit score being affected with either lender when you’re shopping around.
Prosper currently offer loans in all states but Iowa and West Virginia. SoFi, on the other hand, offers loans to residents of every state except Mississippi.
Prosper also requires that your debt-to-income ratio is below 50%, that you have had no bankruptcy filings over the past year and that you have had fewer than five credit bureau inquiries over the past six months.
SoFi requires that you are employed, have sufficient income from other sources if you are not employed or have an offer for employment to begin within 90 days.
Keeping an eye on those fees
As mentioned previously, Prosper charges an origination fee on its loans, ranging from 2.41% - 5.00% of the loan amount. It also charges a failed payment fee of $15 if a scheduled payment doesn’t go through.
Additionally, a late fee of 5% of the unpaid amount, or $15, whichever is greater. is charged after a payment is 15 days late.
SoFi doesn’t have any fees associated with its loans, including late fees.
Neither lender has a prepayment penalty, which is great news if you’re able to make extra payments. Doing so will decrease the amount you’ll pay in interest over the life of the loan.
As with many online lenders, SoFi and Prosper both have applications available online that are simple to fill out. These applications are less of a hassle compared to the process of applying for a loan with a traditional bank.
Both lenders will give you the rates you qualify for after you fill out the initial application.
With SoFi, you can choose to accept your terms, and then move on to receive your funds. Typically you should receive the funds within a few days after signing the loan agreement.
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.
Prosper’s loan process is a bit more involved, as investors must commit to funding your loan. It also has three loan verification stages borrowers must complete before their loan can receive funding.
Prosper loans are listed for 14 days. If a loan is funded before then, it will move along in the process. If a loan doesn’t receive the necessary funding in that timeframe, it will be removed. Borrowers are welcome to reapply and go through the process again if their loan isn’t funded.
Various documents are needed when applying for a loan with either lender, but these documents will vary based on your personal situation. It’s recommended to at least have proof of income and employment.
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.
What can you use a personal loan for?
Personal loans can be used for just about anything, from a wedding, to improving your home, to paying for part of your education.
Those looking to consolidate or refinance their consumer debt may turn to personal loans to get better interest rates as well. If you’re able to get a 5.99% fixed APR with SoFi, that’s likely lower than the APR you have with a credit card lender. You’ll save a lot more money going with SoFi’s loan if you’re able to save 8% or more off your APR.
Which company is better?
Having good or excellent credit opens many doors for you in terms of which lenders will approve you, and what kinds of interest rates you will get. That makes shopping around for the best rates even more important.
Between SoFi and Prosper, SoFi may be the better choice. It offers lower interest rates, which makes a difference in the affordability of the loan. You want to pay the smallest amount possible over the life of your loan, and a lower interest rate will help with that.
Additionally, SoFi has a seven-year term option that Prosper doesn’t offer, just in case you need a bit longer to pay off your loan. And importantly, SoFi does not charge an origination fee.
SoFi also offers a simpler funding process and even offers unemployment protection. That means if you lose your job, you might be able to qualify for a forbearance period (during which no payments are required) while you get back on your feet.
That said, it is slightly more difficult to qualify for a SoFi loan. Prosper may work well for you if you just miss qualifying for SoFi and are also looking for a smaller-sum loan. SoFi is definitely better for large-sum loans, given its high loan cap of $100,000.
Remember, when applying for any loan, you need to look out for yourself and your best interests, as lending companies won’t. Do your due diligence and obtain different quotes. Many lenders will only conduct a soft inquiry on your credit to start, making it even more worthwhile to shop around.
You can shop for more personal loans through MagnifyMoney’s parent company, LendingTree.
|SoFi Versus Prosper: A Quick Glance|
|Loan amounts||$5,000 - $100,000||$2,000 - $40,000|
|APR||5.99% - 18.53% Fixed||7.95% - 35.99%
|General eligibility||Must be a U.S. citizen|
Must be employed, have sufficient income from other sources if you are not employed or have an offer for employment to begin within 90 days
|Must have a debt-to-income ratio below 50%, no bankruptcy filings over the past year and fewer than five credit bureau inquiries over the past six months|
|Fees||None||Origination fee of 2.41% - 5.00%
Failed payment fee of $15
Late fee of 5% of the unpaid amount, or $15, whichever is greater.
|Repayment time||24 to 84 months||36 or 60 months|
|States where loan is offered||Everywhere but Mississippi||Everywhere but Iowa and West Virginia|
|Credit Score||Minimum 680||Minimum 640|