Inflation is on the rise, and it seems like we all have an endless list of unexpected bills. Whether vehicle repairs, ER trips, debt consolidation, or broken appliances, the costs of everyday life keep mounting. It's no surprise that more people are turning to personal loans.

Upstart and Prosper are two popular online lenders that offer personal loans with simple applications. In this review, we'll help you weigh the important factors to pick which is best for you.

What is Upstart?

Started by former Google employees, Upstart uses artificial intelligence (AI) to match lenders with borrowers. It connects people in need of money to those with money who wish to invest it. Since it is more tolerant of low-credit customers, the AI approval process is a useful feature. It facilitates some borrowers who would not otherwise be authorized if a lender merely looked at their credit score and debt-to-income ratio. Upstart provides loans ranging from $1,000 to $50,000

What is Prosper?

Prosper is a lending platform that connects borrowers and investors through peer-to-peer lending.  Individual investors fund your loan rather than a bank lending you money. You could have a higher chance of obtaining funds, and buyers profit from your loan's interest. Personal loans and home equity lines of credit are available through Prosper. They offer loans ranging from $2,000 to $40,000 with terms of three or five years. You also don't have to worry about paying a prepayment penalty if you pay off the loan early.

What do they both offer?

Both Upstart and Prosper are platforms that help borrowers meet lenders, outside of the traditional bank model. In the case of Prosper, they are peer-to-peer loans, allowing individual investors to fund loans. Former Google employees established Upstart in 2012, whereas Prosper has been around since 2005 when it first entered the lending market. Personal loans are the only products offered by both lenders. Prosper and Upstart provide loans that cover debt consolidation, healthcare financing/medical financing, home improvement, and so on.

Upstart and Prosper have the following features in common:

  • Platforms for finding a loan outside of the traditional bank model.
  • They only deal with personal loans.
  • Both have a four- to five-year repayment time frame.
  • The BBB has given Upstart and Prosper an "A" rating and accreditation.

What does Upstart uniquely offer?

  • Simplified benefit: Upstart puts the power of AI searching to work for you. Founded by former employees of Google, they’ve brought their understanding of quick and accurate searching to the world of lending.
  • Fast Service: Personal loans can get approval in 1 day to 3 days. In addition, 99% of personal loans get deposited within one business day after approval.
  • Competitive rates: Upstart offers personal loan rates that are 10% lower than those offered by traditional lenders.
  • Services: Upstart Offers Personal loans, car refinancing, home improvement loans, wedding day celebration loans, medical loans, debt consolidation, and so on.
  • No prepayment penalties: Unlike with some other loans, you can pay off any portion of the loan without hurting your credit score, even paying off the entire loan at any moment. 

What does Prosper uniquely offer?

  • Easy Service: As it is a peer-to-peer lending service, loan approvals can be simple and approved faster. 
  • Transparent: To pre-qualify, they run a soft credit check. Payments are reported to three credit bureaus. They declare rates, fees, and terms on the website.
  • Flexibility: They provide joint loans to their customers. They also allow you to adjust the due date of your payment.
  • Wide range of offers: Prosper offers loans ranging from $2,000 to $40,000, allowing borrowers to cover a wide range of needs, including debt consolidation, healthcare financing, and costly home improvements. They also offer credit card services.

Rates, terms, and fees comparison

Personal loans from Prosper are offered in values ranging from $2,000 to $40,000. Borrowers who are past due on their payments are charged a 5% late fee by Prosper. The APR can range from 7.95% to 35.99%. Borrowers on Prosper can pick between three and five-year loan terms. The origination charge is 2.4% to 5% of the loan amount.

Upstart charges origination costs ranging from 0% to 8% on average, with a late payment fee of 5% of the past-due amount. The APR ranges from 3.09% to 35.99%, with a loan duration of 3 to 5 years. Upstart offers personal loans with fixed rates ranging from $1,000 to $50,000. However, in certain states like Massachusetts ($7,000), Ohio ($6,000), New Mexico ($5,100), and Georgia ($3,100) have state-specific minimums.

Header

UPSTART

prosper

Minimum Credit Score

600

640

Loan Amount

$1,000-$50,000

$2,000-$40,000

Approval Time

1 to 3 days

1 to 5 days

APR

3.09% To 35.99%

 7.95% To 35.99%

Origination Fees

0% - 8%

2.4% To 5%

Loan Terms

3 To 5 Years

3 To 5 Years

Eligibility Criteria for Upstart and Prosper

Upstart

  • American citizen or a permanent US resident living in a state other than Virginia.
  • At least 18 years old.
  • A credit score of at least 600.
  • You must have a valid bank account in your name.
  • A reliable source of income.
  • No previous bankruptcies.
  • No outstanding delinquencies at the time.
  • No more than five credit inquiries for the last 6 months.

Prosper

  • You must be at least 18 years old.
  • A citizen or permanent resident of the United States..
  • A credit score of at least 640.
  • A bank account in your name.
  • A dependable source of revenue, a yearly salary.
  • Not more than 5 credit searches for the last 6 months.
  • Having a debt-to-income ratio of no more than 50%.

Which has a better reputation?

The Better Business Bureau has given Prosper an A+ rating and it is BBB recognized. On Trustpilot, the company has a 4.7-star rating out of 5-stars rating based on over 8640 reviews. Prosper was the subject of 31 personal loan complaints to the Consumer Financial Protection Bureau in 2020.

Upstart, an accredited company, has a B+ rating from the Better Business Bureau. Whereas, based on over 31,900 reviews, Upstart has received an excellent rating of 4.9-star out of 5 stars on Trustpilot. Positive feedback emphasizes how simple the application procedure is and how convenient Upstart's credit card consolidation loans are.

Final thoughts

If you're not in a rush and want to save money, Prosper might be the right option for you. However, Upstart is a good place to go if you need a loan under $2,000 or up to $50,000. Upstart also outperforms the competition in terms of customer satisfaction. In addition, Upstart's online application takes just a few minutes to complete. 

You may receive financing as soon as the next business day after accepting the loan contract, although Prosper may take longer. If you qualify, you'll have your completed loan contract in seven days while your approved money gets disbursed after you agree.  Finally, you should examine your loan alternatives before signing to ensure that you get the best offer possible. 

FAQs

Who can benefit from Upstart?

Upstart is a viable alternative for debt consolidation for borrowers with fair to good credit. You should be able to acquire a lower APR if you have good credit. Correlating with this, when you have a lower credit score, you could still meet the criteria for a loan if they believe you have decent earning capacity. In addition to your credit, Upstart considers your education and job experience. Upstart could be a good option if you need money quickly and don't mind paying an origination fee.

Is it necessary for me to pay a loan origination fee to Upstart or Prosper?

Yes, before disbursing your authorized money, both Upstart and Prosper will charge a loan origination fee from your approved loan. When deciding how much you want to borrow, keep this deduction in mind.

How can I make payments on my Upstart or Prosper loan?

Upstart and Prosper allow you to repay your loan online via automatic payments or paper checks.

What are the lowest and highest loan terms these lenders are willing to offer?

Personal loans from Upstart and Prosper offer three to five-year repayment durations.

Is Upstart similar to Prosper?

While Prosper is peer-to-peer, Upstart is very similar in that both services pair you with a lender that fits your personal needs. Personal loans are the only products offered by both lenders.

Will I be able to get a competitive rate?

It takes several criteria to determine a good rate, including your credit history and income. It is beneficial to browse around, just like you would when purchasing a home or other major investment. Consider using a service that allows you to apply for loans from numerous lenders with a single application. This will increase your chances of getting the best rate and terms on your loan.

Is taking out a personal loan risky?

Keep track of the details, just like any other loan. Don't borrow more money than you can safely return, make on-time payments every month, and speak with your lender if you require forbearance or other adjustments due to unanticipated events. It's also a good idea to look into the lender's reputation. Customer reviews and a Better Business Bureau rating can be quite helpful in deciding which supplier to select for your loan.

About the author 

Greg Lorenzo

Greg is a financial expert who has been advising his audience on loans for over 10 years. He has a wealth of knowledge and experience in the area, and he is passionate about helping people get the best possible deal on their loans. Greg is an expert in negotiating loans, and he has a proven track record of getting his clients the best possible terms. He is also a strong advocate for financial literacy, and he regularly gives workshops and seminars on the topic.

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