Prosper Loans marketplace and Lending Club are among a group of companies that use the Internet to manage lending service in the finance industry. They are considered to be outside the realms of traditional lenders, and as so, are gaining traction as an alternative to the large banks.
If you are trying to obtain finance, there are a number of alternatives to conventional borrowing, with peer to peer loans becoming increasingly popular. The two major lending companies – Lending Club and Prosper Loans MarketPlace – both provide low-interest loans up to $35,000, with a number of repayment options that will allow you to control your finances and budget more effectively.
However, there are a number of differences between these two lenders, especially when it comes to eligibility and fees. This article explores the differences between Lending Club and Prosper, with a focus on the services offered by both companies.
1. Interest rates
When obtaining a loan you will need to opt for a service that charges the lowest rate of interest. Interest rates can differ between Prosper and Lending Club, so it is imperative that you do your research before committing to a particular service. Looking at both companies carefully, Prosper may offer lower interest rates than Lending Club.
Prosper Loan Market offered a rate of 8.69% on a loan of $4,950, while Lending Club offered a rate of 9.71% on a loan for the same amount. Although this is only a difference of just over 1%, this could mean paying back $775 in interest over a three-year period on the Lending Club loan, compared to $691 on the Prosper loan – a difference of $84.
2. Application approval times
There are also differences when it comes to the time it takes for each company to approve your loan and release your finds. Just like conventional finance, you will often need to to provide some personal information when you make your application, such as details of your income.
A credit check will usually also be carried out to check whether you are able to make repayments on the loan. How long it takes for the company to review your application and approve your loan will depend on various factors, but should take on average between four and seven days.
3. Eligibility based on location and charges
Both Lending Club and Prosper have different lending criteria, and where you live in the country could have an effect on which company you opt for. For example, Lending Club do not currently offer loans to customers living in Idaho or Nebraska, while Prosper do.
You may also find that each company charge different fees for your loan application. This will depend on the type of loan you are eligible for, but as a general rule, Prosper charge a fee of 1.95% to A-grade borrowers. In comparison, Lending Club charge around 1% on loans for A-grade borrowers, which works out to be much cheaper, especially if you are thinking of borrowing a larger amount.
4. Customer service
Both Prosper and Lending Club are renowned for providing good customer service, and there are a number of ways you can get in contact with a member of staff from both companies, if you have a query about a loan you have already taken out, or want to make a new application for finance.
To Summarize here, while Prosper may charge a slightly higher One off fee to use their service, you will find that generally the interest rate on your loan will be lower than with Lending Club.