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Many personal loan lenders require borrowers to have good or excellent credit, making it difficult to qualify for a loan. If your credit is in the fair range or below, you may have a better chance of getting a loan—and a better rate—by working with a peer-to-peer lender.
P2P lenders work with multiple investors to fulfill loans, increasing your odds of qualifying. You usually can apply online and get a decision quickly. If approved, your loan may be disbursed within a few days. To help you find the right company, we reviewed 12 P2P lenders based on factors like APRs, loan terms, fees, and rates of return for investors. Here are the best P2P lenders today.
| Company | APR | Credit Score est. | Loan Amount | More Details | |
|---|---|---|---|---|---|
The companies on this page are no longer true P2P lenders. They now connect borrowers with institutional investors, like banks, rather than individual investors. However, in the case of Prosper, funding still can come from individuals in addition to institutions. These firms still serve a similar purpose and still may offer loans for people with fair or worse credit, but loan approval may be based mostly on the decisions of large institutions rather than individuals. This could affect the likelihood of qualifying, but many borrowers may not notice the difference. There still may be some true P2P lenders, but none made our best list.
Best Overall : Prosper
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- APR Range: 8.99% - 35.99%
- Loan Amount: $2,000 - $50,000
- Loan Terms: 24 months - 60 months
While most personal loan lenders require borrowers to have good to excellent credit, Prosper is willing to work with borrowers with less-than-perfect credit. It accepts borrowers with credit scores in the “fair credit” range and also allows joint applicants. And Prosper has outstanding customer reviews.
Allows joint applications
Accepts borrowers with fair credit
Quick loan disbursement
Charges origination fees
Five years is the longest term
Payments by check incur additional fees
Prosper is our choice as the best overall peer-to-peer lender because it works with borrowers with fair credit and offers a wide range of loan amounts. Its minimum credit score is just 600, and it allows borrowers to submit joint applications with co-borrowers. If you don’t meet the lender’s requirements on your own, adding a co-borrower with good credit can increase your chances of qualifying for a loan.
Individuals can borrow up to $50,000 to consolidate debt or finance major expenses, and they can get their money fast.
Prosper has outstanding reviews from customers. However, Prosper charges origination fees. Depending on your risk rating, your fee can be 1.00% to 7.99% of the loan amount. If your loan originated on or after August 1, 2017, Prosper also charges fees if you make your payments via check; the check payment fee is the lesser of $5 or 5% of your loan payment amount.
Prosper is one of the few consumer loan companies that still allow individual investors. You can invest with as little as $25, and Prosper’s average historical return is 5.50%. However, not everyone is eligible to invest with Prosper. Only residents of certain states can qualify and, depending on where you live, you may have to meet state suitability standards to invest.
Best for Small Business : Funding Circle
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- APR Range: 11.29% - 30.12%
- Loan Amount: $25,000 - $500,000
- Loan Terms: 6 months - 84 months
If you are a small business owner, getting funding may be challenging. But with Funding Circle, you can borrow up to $500,000 for your business and receive your funds in as little as 48 hours.
Pre-qualification tool available
Multiple credit options
Quick loan disbursement
Charges origination fees
Requires at least moderately good personal credit
Funding Circle is a peer-to-peer lending platform specifically designed to provide loans to small businesses. Since its launch in 2010, investors have issued more than $20.2 billion in loans to more than 135,000 small businesses globally.
It’s our pick as the best peer-to-peer lender for small businesses because it offers quick loan disbursement and multiple credit options, such as for business owners who can apply for business term loans and business lines of credit.
Funding Circle’s business term loans range from $25,000 to $500,000, and borrowers can select terms ranging from six months to seven years. The lender has a pre-qualification tool, so you can find out if you’re eligible for a loan without undergoing a hard credit inquiry.
Before applying for a loan from Funding Circle, keep in mind that the lender charges origination fees. The fee ranges between 4.49% to 10.49% of the loan amount, depending on credit and term length.
Not everyone will qualify for a small business loan. Even though Funding Circle issues loans to businesses nationwide, it requires borrowers to have a personal credit score of 660 or higher. Plus, businesses must be in operation for at least two years.
Compare the Best Peer-to-Peer Loans for May 2024
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Guide to Choosing the Best Peer-to-Peer Lending Websites
Why Should You Use a Peer-to-Peer Loan?
Peer-to-peer lenders are best for borrowers who may struggle to qualify for loans from traditional banks and lenders. P2P lenders have more relaxed borrower requirements, making it more likely that you’ll qualify for a loan.
They also can be a good fit for those who need to borrow money but are ineligible for other types of financing. For example, entrepreneurs who are launching small businesses are unlikely to qualify for traditional business loans, so P2P loans can be a valuable alternative.
When deciding which loan type is best for you, keep in mind that peer-to-peer loans can have higher-than-average interest rates and added fees, such as origination fees, that can add to your overall cost.
Comparing Peer-to-Peer Loan Lenders
When comparing loan offers from peer-to-peer lenders or any personal loan lender, there are a number of factors to consider:
- APR: The APR is the total cost you pay to borrow money, including interest rates and fees. The higher the rate, the more you’ll pay. The average APR for a loan with a 24-month term is 12.49% as of February 2024. However, your rate may be higher or lower than average, as it is determined by your credit score, income, debt history, and selected loan term.
- Loan Terms: The loan term is how long you have to repay the loan. Most personal loans have terms of five years or less. A shorter term will give you a higher monthly payment, but you’ll also likely get a lower interest rate and a lower overall repayment cost.
- Origination Fees: An origination fee is charged by some lenders—but not all. The fee is a percentage of your loan amount; for example, a $1,000 loan with an 8% origination fee would add $80 to your loan cost (or it may be deducted from your loan proceeds).
- Prepayment Penalties: Some lenders charge prepayment penalties if you pay off your loan sooner than is stated in the loan agreement. When comparing lenders, make sure there is no prepayment penalty to avoid those costs.
- Minimum Credit Score: The minimum credit score is the score you need to qualify for a loan from a particular lender. In general, P2P lenders tend to look for credit scores of around at least 600. However, each lender has its own requirements.
- Collateral: If you have less-than-perfect credit, some personal loan lenders offer secured loans. You use property, such as a car, as collateral for the loan. Using collateral increases your odds of qualifying for a loan and securing a better interest rate.
- Loan Disbursement: While some lenders will disburse your loan as soon as the next business day after approving your application, other lenders can take several days (or more). If you need the money fast, make sure you select a lender that offers quick loan disbursement.
How to Apply for a Peer-to-Peer Loan
Most P2P lenders offer pre-qualification tools that allow you to check your eligibility for a loan and view sample rates and repayment terms without affecting your credit score. If you decide to proceed with the loan application, you can usually complete it online.
To apply for a personal loan you’ll need to provide your personal information, including:
- Your name
- Address
- Social Security number
- Income
- Employer information
The lender will review your application and perform a hard credit inquiry. If approved, the P2P lender will assign you a risk category and submit your information to its investor platform. Its investors can review that information and make a bid to fund the loan.
Because lenders usually work with institutional investors, such as banks and credit unions, this process is relatively fast, and your loan can be funded and disbursed within a few days.
How Can I Invest and Make Money With P2P Loans?
While P2P lending used to be an attractive way to earn a higher rate of return than stashing money in a savings account, there are fewer options for individual investors now.
Few P2P companies allow individual investors to invest and fund loans; Prosper is one of the few left that allows individual investors to fund consumer loans. With Prosper, you can get started with a minimum investment of just $25.
Other options include:
- Kiva: Kiva is a P2P lender that issues loans to people across the globe who may struggle to get financing elsewhere. You can invest as little as $25 to help people get small businesses off the ground and support their families.
- Fundrise: Fundrise is a way to invest in a diversified portfolio of commercial and residential real estate, and you can start with just $10.
- PeerStreet: Like Fundrise, PeerStreet is a P2P lender focused on real estate. Individual investors can contribute to home offers, bridge loans, and investment property loans. However, it has a higher minimum to start investing at $1,000.
What’s the Difference Between P2P and Crowdfunding?
P2P loans and crowdfunding are both ways to get a lump sum of cash from many people. But how these financing options work is quite different. A P2P loan is usually based on creditworthiness, and it must be repaid with interest over a set loan term. By contrast, crowdfunded funds don’t have to be repaid, and because people decide to donate to the fund based on the service it offers or the cause it supports, crowdfunding doesn’t involve credit checks.
Why Are Some Lenders No Longer Offering P2P Loans?
As a novel idea, P2P loans previously were largely exempt from the regulations and consumer protection laws that applied to personal loans issued by banks and credit unions. However, the U.S. Securities and Exchange Commission (SEC) labeled P2P loans as securities, and therefore they have to be registered with the FEC to comply with federal securities laws. Of the P2P lenders that continue to operate, most have moved away from working with individual investors and instead only utilize institutional investors.
Are P2P Loans a Better Choice Than Payday Loans?
While P2P loans may have higher interest rates than you see advertised by some personal loan lenders, they’re still significantly less expensive than payday loans. With consumer P2P loans, interest rates can reach 35.99% and higher. However, they’re much lower than the APRs of payday loans. According to the Consumer Financial Protection Bureau, the typical two-week payday loan has fees that equate to an APR of almost 400%.
Are P2P Loans Safe?
For borrowers, P2P loans are quite safe. Platforms that offer P2P loans act as intermediaries between investors and borrowers. Peer-to-peer loans aren’t insured or protected by the government. However, that puts most of the risk on investors, rather than borrowers.
Do P2P Loans Affect Your Credit Score?
Most P2P lenders have minimum credit score requirements and perform hard credit inquiries, and each inquiry can cause your score to drop. One exception is crypto-backed P2P loans. These are secured by collateral and can be issued without credit checks, so there are no credit inquiries that can affect your credit. With all P2P loans, your timely payments can affect your credit, too. If you fall behind on your payments and your debt is sent to collections, those actions will show up on your credit reports and cause your score to drop.
Final Verdict
There are fewer peer-to-peer lenders offering consumer loans than in years past, but they can still be useful options for eligible borrowers. If you’ve struggled to qualify for personal loans or business loans because of your credit, you may have a better chance of getting a loan by working with a peer-to-peer lender.
Prosper is our choice as the best overall P2P lender because of its available loan amounts and relatively low credit requirements. However, if you want a higher loan amount—or need more time to repay the loan—you’ll need to find another lender or funding avenue, such as crowdfunding.
And, if you have good credit and stable income, you may qualify for lower rates if you get an unsecured personal loan from a bank, credit union, or online lender. Get quotes and compare rates from our selections of the best personal loan lenders.
How We Chose the Best Peer-to-Peer Lenders
Our team evaluated 38 lenders and collected 1,520 data points before selecting our top choices. We weighed more than 20 criteria and gave a higher weight to those with a more significant impact on potential borrowers.
The top picks were selected based on factors like membership requirements (weighted 15%), average fixed APR (weighted 15%), and average origination fees (weighted 10%).
We also took into account the flexibility of repayment terms, helpful features like prequalification, and whether a co-signer or joint applications are permitted to ensure borrowers get the best possible experience. For further information about our selection criteria and process, our complete methodology is available.
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