Prosper Complaints: 6 Problems Borrowers Face for a Loan
Prosper is a peer to peer lending company that offers personal loans at low rates. These loans are unsecured, which means you do not have to put up any collateral (like a house or car) that could get taken away if you can’t make payments. Each loan is typically funded by multiple people all over the United States. In this way, Prosper is a marketplace connecting those who need a loan to those who have extra money to lend.
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Won’t affect your credit score.
However, not everybody has had a good experience getting a loan through them. There remain a number of problems that borrowers continue to face.
Six Complaints Borrowers Have When Applying for a Loan at Prosper
Today we are going to explore six problems that borrowers can have at Prosper. If we are aware of these complaints, the process of getting a loan can be much smoother.
Complaint #1: Some Loan Applications are Denied
One of the main struggles you might have with Prosper is getting approved for your loan. Their requirements can sometimes be quite strict. Not only do they prefer you have a good salary and job, but your credit score has to be at least 640 to even be considered for approval.
Solution : A different company called Lending Club is an option. They approve peer to peer loans for some borrowers who are denied one at Prosper. You can read about the difference between Lending Club and Prosper here (Lending Club vs Prosper), but they basically offer the same loan service. It is possible you could be approved at Lending Club even though you were declined at Prosper.
Check your rate @ Lending Club (won’t hurt your credit score).
Complaint #2: Interest Rates Can Be Too High
Sometimes when people get a loan at Prosper, they realize their interest rates are higher than they can afford. This is important to mention. For example, imagine you need a loan for $10,000 and you get approved for agreatinterest rate of 7%. You would pay $1,150 in interest on a three year loan. However, if your interest rate was higher, perhaps 14%, you would pay $2,300 in interest over three years. $1,150 versus $2,300: a good interest rate can save you thousands of dollars.
Solution : here are four ways you can lower your interest rate:
- Improve your credit score. Go to AnnualCreditReport.com and make sure your report is free from errors. Then do your best to fix any accounts which might be hurting your score.
- Only apply for as much as you need. People who apply for the maximum loan amount ($35,000) usually pay the very highest in loan payments. It might be tempting to get a larger loan, but you may pay for it later through high interest rates.
- Take out a 36-month (3 year) loan. Many people want a 60-month (5 year) loan, but this can increase their interest rate. If possible, try and stick with a three year loan.
- Do not shop around for credit before you apply. Each time you apply for credit your score goes down. If you have recently applied for a loan somewhere else, it might be a good idea to let some time pass (at least six months) before you apply for a p2p loan from Prosper.
doing these four things, you are more likely to get the lowest possible rate.
Complaint #3: Loan Payments Can Be Expensive
Some borrowers have a difficult time paying off Prosper loans because they cannot afford the payments. Many of these loans are for amounts as high as $35,000, which can have payments of $1000 per month. Obviously many of us cannot afford such a high loan payment.
Solution : Only borrow as much as you need. Do not borrow extra just because you have been approved for it. The more you borrow, the higher your loan payments will be. If you need $10,000 to pay off your credit cards, do not get a loan for $20,000. Take out the exact amount you need and you will be more able to make your monthly payments.
It may also help you set up a budget so as to afford these monthly payments for the full three years of the loan. This article by LearnVest “I Want to Set Up a Budget” can be a helpful place to begin.
Complaint #4: Prosper Calls Too Much
Sometimes a borrower will miss a payment, either by accident or because they cannot afford them. When this happens, Prosper is quick to notify them about it, usually over email or with a telephone call. If they continue to not make payments, Prosper will send the loan into collections. At this point, people will be assigned to contact the borrower and remind them of their payments. As a result, borrowers can get annoyed by the emails and phone calls they receive.
Solution : Be sure to make your payments on time. If you miss a payment, do your best to fix things quickly, communicating your situation to Prosper as honestly as possible. The longer you wait, the more likely your account will go into collections, which will involve even more phone calls than before.
Complaint #5: Loans are Unavailable in My State (ME, IA & ND)
The following states do not allow loans through Prosper: Maine, Iowa, and North Dakota. If you live in one of these states, it can be frustrating that you cannot get a loan, but unfortunately there is no way around this. You will have to find a loan elsewhere.
Complaint #6: Is Prosper a Scam? Is it Safe?
Finally, one of the main questions people have with Prosper is whether or not they are a legit company since few people in the United States have ever heard of them. Is Prosper Marketplace a scam or not? Are they a safe place for a loan? How can you be sure?
Solution : Read the news. Prosper has many positive stories online from trustworthy sites.
Additionally, Prosper has an A+ rating from the Better Business Bureau (BBB) as well as many security features on their site (like encryption) that should keep your information safe and secure.
Conclusion: Prosper is a Great Option
While some people who get a loan through Prosper have problems, most borrowers have no complaints. Most borrowers are satisfied with the lower payments that Prosper offers, especially compared to the 20% interest rates on their credit cards. If we follow some basic rules, Prosper can be agreatoption for a loan.
Read: My step-by-step review of getting a Prosper loanCheck your rate
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Category: Bank loan