Best Peer-to-Peer Loans in 2021

Peer-to-peer loans are personal loans funded by individuals, groups and financial institutions. Instead of applying directly to a bank or other financial institution for a personal loan, borrowers submit applications through a peer-to-peer lending company that acts as a matching agent. These types of loans can be a great financial opportunity for borrowers and investors alike.

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      With the right match, borrowers can get personal loans at competitive rates, and lenders may be able to reap a higher yield than a savings account or CD. We’ve researched interest rates, loan amounts, customer satisfaction, customer support and fees using our proprietary SimpleScore methodology to find the best peer-to-peer loans for borrowers and lenders.

      The 4 best peer-to-peer loans of 2021

      • Best for Online Peer-to-Peer Lender: Prosper
      • Best Peer-to-Peer Lender for Short Credit History: Upstart
      • Best Bad Credit Peer-to-Peer Lender: Peerform
      • Best Peer-to-Peer Lender for Credit Card Debt Consolidation: Payoff

      Best peer-to-peer lenders at a glance

      APR Range Loan Amount Term SimpleScore
      Prosper 7.95%–35.99% $2K–$35K 36–60 months 3.2/5
      Upstart 8.94%–35.99% $1K–$50K 36–60 months 3.2/5
      Peerform 5.99%–29.99% $4K–$25K Up to 3 years 3.4/5
      Payoff 5.99%–24.99% $5K-$40K 24–60 months 2.75/5

      *Rates accurate as of March 2021.

      Best for Online Peer-to-Peer Lender – Prosper

      As the founding father of peer-to-peer loans, Prosper is a trusted lender for individuals to get access to personal loans with the option to pay them off early.

      Loan Amount
      $2K–$35K
      APR Range
      7.95%–35.99%
      Term
      36–60 months
      SimpleScore
      3.2 / 5.0
      close
      SimpleScore Prosper 3.2
      Rates 2
      Loan Size 5
      Customer Satisfaction 3
      Support 3
      Fees 3

      Prosper paved the way for peer-to-peer lending when it was the first operation of its kind back in 2005. Since then, Prosper has been connecting borrowers with fair to good credit scores with investors for affordable personal loans. Prosper works with borrowers with the highest debt-to-income ratio: 50%. If you’re on the higher end of that ratio, you may not qualify for the best rates or highest borrowing limits. Origination fees are added to your loan based on your creditworthiness, and late payments result in the greater of 5% of the unpaid loan amount, or $15. The good news for borrowers is that there are no prepayment fees — meaning borrowers can pay off their loans at any time.

      Prosper Disclosure

      For example, a three-year $10,000 personal loan with a Prosper Rating of AA would have an interest rate of 5.31% and a 2.41% origination fee for an annual percentage rate (APR) of 6.95% APR. You would receive $9,759 and make 36 scheduled monthly payments of $301.10. A five-year $10,000 personal loan with a Prosper Rating of A would have an interest rate of 8.39% and a 5.00% origination fee with a 10.59% APR. You would receive $9,500 and make 60 scheduled monthly payments of $204.64. Origination fees vary between 2.41%-5%. Personal loan APRs through Prosper range from 7.95% (AA) to 35.99% (HR) for first-time borrowers, with the lowest rates for the most creditworthy borrowers. Eligibility for personal loans up to $40,000 depends on the information provided by the applicant in the application form. Eligibility for personal loans is not guaranteed, and requires that a sufficient number of investors commit funds to your account and that you meet credit and other conditions. Refer to Borrower Registration Agreement for details and all terms and conditions. All personal loans made by WebBank, member FDIC. Prosper and WebBank take your privacy seriously. Please see Prosper’s Privacy Policy and WebBank’s Privacy Policyfor more details. Notes offered by Prospectus. Notes investors receive are dependent for payment on unsecured loans made to individual borrowers. Not FDIC-insured; investments may lose value; no Prosper or bank guarantee. Prosper does not verify all information provided by borrowers in listings. Investors should review the prospectus before investing.

      Best Peer-to-Peer Lender for Short Credit History – Upstart

      Upstart offers peer-to-peer loans from $1,000 to $50,000 for those customers with at least a 620 credit score, but also will work with people with insufficient credit history.

      Loan Amount
      $1K–$50K
      APR Range
      8.94%–35.99%
      Term
      36–60 months
      SimpleScore
      3.4 / 5.0
      close
      SimpleScore Upstart 3.4
      Rates 2
      Loan Size 5
      Customer Satisfaction 4
      Support 3
      Fees 3

      Upstart can get you a rate quote in as little as five minutes and entirely online. While Upstart does mention it will only work with borrowers who have at least a 620 credit score, the company does say it’s willing to work with people who have insufficient credit histories. Upstart’s flexibility to work with consumers with insufficient credit history is a major positive. Additionally, the fact the lender looks at more than just your credit score when making a decision can be big for some struggling to find loan approval.

      Upstart Disclosure

      * The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart Platform will have an APR of 19% and 36 monthly payments of $35 per $1,000 borrowed. There is no down payment and no prepayment penalty. Average APR is calculated based on 3-year rates offered in the last 1 month. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved. ** Estimated savings are calculated based on the credit profiles of all loans originated by Upstart-powered lenders using the Upstart Platform as of April 1, 2019 in which the funds were used for credit card refinancing. Estimated savings are calculated by deriving current credit card APR using minimum monthly payment and 1% of the principal balance. The estimated credit card APR is then compared to the accepted loan to determine median savings per borrower. To evaluate savings on a loan you are considering, it is important to compare your actual APR from your existing debt to the APR offered on the Upstart Platform. More than 303,000 loans have been originated on the Upstart platform as of July 1, 2019. Images are not actual customers, but their stories are real. † If you accept your loan by 5pm EST (not including weekends or holidays), you will receive your funds the next business day. Loans used to fund education related expenses are subject to a 3 business day wait period between loan acceptance and in accordance with federal law. ‡ While most of our borrowers opt for automated recurring payment for ease of use, we also accept payments by check or one time electronic payments. Borrowers have the flexibility to choose the repayment method that works best for them. 9 out of 10 Upstart users surveyed internally reported that they would recommend Upstart. †† When you check your rate, we check your credit report. This initial (soft) inquiry will not affect your credit score. If you accept your rate and proceed with your application, we do another (hard) credit inquiry that will impact your credit score. If you take out a loan, repayment information will be reported to the credit bureaus. § Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Loans are not available in West Virginia or Iowa. The minimum loan amount in MA is $7,000. The minimum loan amount in Ohio is $6,000. The minimum loan amount in NM is $5,100. The minimum loan amount in GA is $3,100.

      Best Bad Credit Peer-to-Peer Lender – Peerform

      With high processing fees for check payments and a low maximum loan amount, Peerform may not be all that accessible to certain borrowers.

      Loan Amount
      $4K–$25K
      APR Range
      5.99%–29.99%
      Term
      Up to 3 years
      SimpleScore
      2.8 / 5.0
      close
      SimpleScore Peerform 2.8
      Rates 4
      Loan Size 3
      Customer Satisfaction N/A
      Support 3
      Fees 1

      Peerform is another traditional peer-to-peer lending site. Borrowers create a simple profile online and wait for individual investors to back their request. Even though Peerform does offer loans to those with poor credit, there’s another benefit to this platform: borrowers can apply with a credit history as short as one year. There are some downsides to Peerform, though. Since it is accommodating to borrowers with shorter credit histories, the maximum loan amount is lower than others at just $25,000. And let’s not forget fees: If you can’t make your monthly payment by direct debit or online, you’ll end up paying for it. Peerform charges a $15 processing fee for paper checks. Depending on your loan terms, this fee alone could add $540–$900 to the cost of repayment.

      Best Peer-to-Peer Lender for Credit Card Debt Consolidation – Payoff

      It’s not an excuse to max out your credit cards, but we like that Payoff can help users increase their credit scores when they pay off their credit cards.

      Loan Amount
      $5K-$40K
      APR Range
      5.99%–24.99%
      Term
      24–60 months
      SimpleScore
      4.5 / 5.0
      close
      SimpleScore Payoff 4.5
      Rates 5
      Loan Size 5
      Customer Satisfaction N/A
      Support 4
      Fees 4

      Payoff is a peer-to-peer lending platform that partners with financial institutions (mainly credit unions) to offer loans to pay off credit card debt. Its goal is to improve the financial well-being of its members. With a focus on financial literacy, Payoff excels in member experience. Its assessments aim to help members better understand their relationship to money. You’ll get a welcome chat to onboard you to the service, plus quarterly check-in calls throughout your first year as a member to help keep you on track. However, it may not be best if you just have a few thousand dollars worth of debt to pay off. Since the minimum loan amount is $5,000, anyone who needs less than that should consider a lender with a lower option.

      Check Your Personal Loan Rates

      Answer a few questions to see which personal loans you pre-qualify for. It’s quick and easy, and it will not impact your credit score.

      Get Started

      with our trusted partners at Bankrate.com

      What is peer-to-peer lending?

      Peer-to-peer lending, also known as P2P lending, is a system of lending that allows people to borrow money from other individuals, cutting out financial institutions altogether in some cases. This can be a more accessible option for individuals with lower credit scores and presents an opportunity for investors to earn interest while funding loans for others. Often, rates can be lower than getting a traditional loan with a bank, and applicants may be able to get their hands on the money faster.

      [ Read: Where to Find Financial Relief During the COVID-19 Pandemic ]

      How peer-to-peer loans work

      The exact process for how investors and borrowers can engage with peer-to-peer loans can vary slightly among different websites and apps, but the overall concept is the same. Investors can fund personal loans either in full or in part, and they earn interest on the loans as borrowers pay it back. Borrowers will usually need to create a quick personal profile, submit to a credit check and accept the loan terms. Once borrowers have cash in hand, they repay through whatever terms have been set for them.

      Investors 

      Each site is a little different, but there are two main types of peer-to-peer investors: individuals and institutions. Generally speaking, individuals need to create an account with a peer-to-peer lending site to start backing loans. There may be minimum income requirements for investors, as well as minimum amounts you need in your investor account, and how much per loan you can fund. When they’re ready, investors provide money to the borrower and collect interest throughout the set term.

      [ Next: 10 Steps to Rid Yourself of Credit Card Debt Forever]

      Borrowers 

      Applying for a peer-to-peer loan is pretty straight forward for borrowers. Once you figure out that you meet the minimum eligibility requirements for a peer-to-peer loan, you can create a profile and apply. For many peer-to-peer lenders, the initial application only involves a soft credit inquiry (meaning it won’t affect your score). Then you’ll review your loan terms and decide whether or not you want to move forward. Depending on how the site you’re using structures its process, you can receive funds as quickly as the next day or as long as a few weeks.

      [ Read: Best Personal Loans for Bad Credit in 2020]

      What is the financial risk of a peer-to-peer loan?

      Before you borrow from a P2P lender, it’s important to know the risks you may face. Because like taking out any other type of loan, there are downsides.

      One financial risk you face is that the interest rates on peer-to-peer loans may be higher than you’d get from another financial institution. Many online lenders offer competitive interest rates that P2P lenders don’t match. As a result, borrowers with good credit might be best served by getting a loan through more traditional means.

      [ Read: Best Personal Loans for Bad Credit ]

      It’s also important to pay attention to other potential hidden costs. Many online lenders offer personal loans with no fees whatsoever. If your P2P lender charges origination fees or prepayment penalties, you might want to look elsewhere.

      Are P2P loans safe?

      P2P loans might seem riskier than a normal loan. After all, you’re essentially borrowing money from an individual or group of individuals rather than directly from a lender. And many of the companies in the P2P lending game are newer fintech companies rather than the traditional lending names everyone knows. As a result, borrowers may feel unsure about handing over financial and personal information

      The most important key to making sure your borrowing experience is safe is doing your research. Check to make sure the site has a privacy policy as well as encrypted sessions when you apply for a loan.

      You can also rest assured that when you borrow through a P2P lender, the investor doesn’t gain access to your financial information. All information goes through a secure, encrypted browser session, so it’s as secure as other lenders.

      Why should you consider a peer-to-peer lending site?

      • P2P loans are unsecured loans that borrowers can use for reasons including debt consolidation, home improvements, medical expenses, and more.
      • P2P lenders are an alternative to lenders who don’t want to work with traditional banks or credit unions.
      • For investors, P2P lending sites are a way to diversify your portfolio while potentially earning a higher interest rate than you would elsewhere.
      • P2P loans are available to borrowers with lower credit scores who may not be able to get a personal loan elsewhere.
      • Because P2P loans are unsecured, borrowers don’t have to provide collateral, such as a title to their vehicle.
      • Despite being a more innovative borrowing option, P2P lending is still entirely secure, and investors can’t access a borrower’s financial information.

      Borrowing vs. investing in a peer-to-peer lending site

      The process of borrowing from a P2P lending site is quite similar to borrowing from any other online lender. You fill out an application and once you’re approved and have signed the documents, the money is deposited into your bank account. The application process and income and credit requirements are similar to traditional lending.

      [ More: Can I Get a Loan If I Have No Credit? ]

      P2P investors are the ones who actually provide the money for the P2P loans. So when you borrow from a site, the money isn’t coming from the lender, it’s coming from an investor (either an individual or an organization). Investors sign up for the lending site and contribute the money to fund personal loans. Then, as borrowers pay back the loans, investors receive payments for the amount they lent, as well as interest.

      How to invest on a peer-to-peer lending site

      Are you considering investing in peer-to-peer loans? The process to get started is simple.

      1. Research the different P2P lending sites and decide which one is the right fit. Pay attention to the interest rates each lender offers and the average return advertised. While higher interest rates are a disadvantage for borrowers, they’re actually more advantageous to you as the investor.
      2. Sign up for an account. Once you’ve chosen the right P2P site for you, fill out the necessary paperwork and connect your banking information.
      3. Browse the P2P marketplace. P2P sites often have a marketplace where all personal loans available investors can buy are listed. You can indicate how much you’re willing to invest and what interest rate you want, and you’ll find loans that fit that criteria.

      P2P lending FAQs

      Depending on your P2P lender, there might be some fees associated with your loan. Common personal loan fees include:

      • Origination fees: The fee lenders charge for writing your loan, typically ranging from 0% to 5% of your loan amount
      • Late fees: The penalty your lender charges when you make a late payment
      • Prepayment penalties: The fee you pay when you pay off your loan early to make up for the lost interest on the part of the lender

      Peer-to-peer lenders make money off of the interest charged on loans. When borrowers make a payment on their loans, a portion of that payment goes towards the principal, and a portion goes towards interest. Peer-to-peer investors and lending sites make money off of the interest.

      Peer-to-peer lending can be better than direct lending, but not always. It depends on your financial picture. For example, if you have a less than perfect credit score, peer-to-peer lending can be a more accessible personal loan option, especially if you use a lender that considers more than credit scores in its decisions. However, banks might offer more competitive rates for those with high credit scores than peer-to-peer lenders.

      The best way to prequalify for a peer-to-peer loan is to make sure you meet all of the minimum borrowing requirements for a lender. Eligibility is typically based on your credit score, debt-to-income ratio and current income. How much you need to borrow can also affect your eligibility, as peer-to-peer lenders can have different maximum loan amounts.

      We welcome your feedback on this article and would love to hear about your experience with the peer-to-peer loans we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.

      Methodology

      SimpleScore

      The SimpleScore is a proprietary scoring metric we use to objectively compare products and services at The Simple Dollar.

      For every review, our editorial team:

      • Identifies five measurable aspects to compare across each brand
      • Determines the rating criteria for each aspect score
      • Averages the five aspect scores to produce a single SimpleScore

      Here’s a breakdown of the five aspect scores and their rating criteria for our review of the best personal loans of 2020.

      Why do some brands have different SimpleScores on different pages?

      To ensure the SimpleScore is as helpful and accurate as possible, we developed unique criteria for every category we compare at The Simple Dollar. Since most brands offer a variety of financial solutions, their products and services will score differently depending on what we’re scoring on a given page.

      However, it’s also possible for the same product from the same brand to have multiple SimpleScores. For instance, if we compare NetCredit’s personal loans according to our criteria for the best personal loans, it scores a 2.3 out of 5. But when we compare NetCredit according to the criteria for the best bad credit personal loans, it scores considerably higher, since the criteria for the latter review are more lenient (lenders who serve borrowers with bad credit will always offer higher rates, so we needed to adjust our category methodology to account for different industry standards).

      Questions about our methodology?

      Email Hayley Armstrong at hayley@thesimpledollar.com.

      Rates

      We looked at the maximum APR for each lender — the lower their maximum rate, the higher their score.

      Loan Size

      We awarded higher scores to lenders with more generous loan sizes.

      Customer Satisfaction

      We leveraged the J.D. Power 2019 Personal Loan Satisfaction Study℠ to see how customers rated their experience with each lender. (If a lender wasn’t included in J.D. Power’s study, we skipped this aspect and averaged the four remaining aspect scores.)

      Support

      We awarded higher scores to lenders with the most channels for customer support.

      Fees

      We looked at the three most common fees — origination, late payment, and pre-payment — and penalized lenders for each fee charged.

      Mandie Kelleher

      Contributing Writer

      Mandie is a freelance content writer from Boston, MA. Her writing has been featured in Reviews.com, Bankrate and Insurify. She holds a B.A. in Linguistics and French from Boston University.

      Reviewed by

      • Courtney Mihocik
        Courtney Mihocik
        Loans Editor

        Courtney Mihocik is an editor at The Simple Dollar who specializes in personal loans, student loans, auto loans, and debt consolidation loans. She is a former writer and contributing editor to Interest.com, PersonalLoans.org, and elsewhere.