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Peer to peer lending is a unique investment option, which allows consumers to provide financing directly to consumers, without the need of a bank. It provides a borrower with the ability to obtain affordable capital in a more efficient manner while also providing lenders with a good return on investment. One of the most popular peer-to-peer lending platforms is Prosper Marketplace. The Prosper Marketplace, which is headquartered in San Francisco and has been in operations since 2005, is one of the largest and oldest platforms in the industry. Prosper has many features which help differentiate it from other similar platforms.

Flexible Loan Options

One of the features of Prosper is that it provides consumers with flexible loan terms. The company historically only provided loans that had three year terms, but borrowers can now choose their own repayment and amortization term with a range of three to five years. Furthermore, if a borrower would like to take out a shorter loan, they have the ability to repay the loan early without incurring a prepayment penalty. Prosper also has the ability to fund loans with a range of $2,000 all the way up to $35,000.

Open Use

Many borrowers like the loans through Prosper because the loans can be used for any purpose. While borrowers are required to provide their intended purpose in the loan application for detail purposes, the loans can ultimately be used for anything. Many people use these loans to consolidate debt, make home improvements, and even take a vacation.

Affordability

When taking out a loan through Prosper, a well-qualified borrower will normally receive a good interest rate as well. Those with good levels of income and credit histories will often be able to get a loan with interest rates as low as 5%, which will then be fixed for the term of the loan. These rates are significantly lower than rates on most credit cards and other unsecured financing options. In most cases, the loans come with a low origination fee of around 1% of the loan balance and will not be structured with any additional prepayment or exit fees.

Convenient Process

Another advantage of taking out a loan through Prosper is that it is a very easy and convenient process. You will be able to fill out an initial loan request online that will include your desired loan amount, repayment term, and your basic financial information. Prosper will then be able to provide you with an indication of their terms including the expected rated amount. If you agree with the terms, Prosper will normally be able to have the loan fully approved and funded into your bank account within just a few days.

Prosper as an Investment

While Prosper is a great tool to take out a loan, it can also be a great option for those that act as the lender. Prosper interest rates start at around 5%, but can increase considerably from there. Depending on the amount of the loan, borrower credit score, and use of funds, the interest rates can be as high as 20%. Lenders have the ability to invest in either a pool of loans for diversification purposes or invest in individual loans. In either case, a lender has the ability to review all information about the loans, including borrower income and credit score. This then gives the lender the opportunity to underwrite their loans and make an educated decision on each investment option.