Best of
Peer-to-peer loans are personal loans funded by individual investors or institutions. See our picks for the best peer-to-peer loans from online lenders.
By
Amrita Jayakumar
and
Chanell Alexander
Last updated on December 4, 2023
Edited by
Kim Lowe
✅ Fact checked and reviewed
Edited by
Kim Lowe
✅ Fact checked and reviewed
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Peer-to-peer lending lets you borrow money directly from a person or group of people instead of going through a bank. Like other online loans, they're typically facilitated by a financial tech company and do not need an in-person application or a phone conversation with a loan officer.
Some online lenders, notably Prosper and LendingClub, popularized the concept of peer-to-peer loans in the U.S. Here’s our roundup of lenders that offer peer-to-peer personal loans for borrowers.
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NerdWallet's personal loans content, including articles, reviews and recommendations, is produced by a team of writers and editors who specialize in consumer lending. Their work has appeared in The Associated Press, USA Today, The New York Times, MarketWatch and many other national, regional and local publications. They have been cited in publications including The Harvard Kennedy School, and appeared on NerdWallet's "Smart Money" podcast as well as local TV and radio.
Why trust NerdWallet
- 35+ personal loans reviewed and rated by our team of experts.
- 20+ years of combined experience covering personal loans and financial topics.
- Objective, comprehensive star rating system assessing 20+ categories and 70+ data points.
- Governed by NerdWallet's strict guidelines for editorial integrity.
NerdWallet's personal loans content, including articles, reviews and recommendations, is produced by a team of writers and editors who specialize in consumer lending. Their work has appeared in The Associated Press, USA Today, The New York Times, MarketWatch and many other national, regional and local publications. They have been cited in publications including The Harvard Kennedy School, and appeared on NerdWallet's "Smart Money" podcast as well as local TV and radio.
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Explore a wider selection of lenders and find the perfect match for your financial situation.
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Peer-to-Peer Personal Loans for Borrowers
Lender ▾ ▾ | NerdWallet Rating ▾ ▾ | Est. APR ▾ ▾ | Loan amount ▾ ▾ | Min. credit score ▾ ▾ | Learn more |
|---|---|---|---|---|---|
Prosper See my rateson NerdWallet's secure website on NerdWallet's secure website | 4.5 /5 | 6.99-35.99% | $2,000-$50,000 | 560 | See my rateson NerdWallet's secure website on NerdWallet's secure website |
LendingClub See my rateson NerdWallet's secure website on NerdWallet's secure website | 4.5 /5 Flexible payments | 9.57-35.99% | $1,000-$40,000 | 600 | See my rateson NerdWallet's secure website on NerdWallet's secure website |
Upstart Top 3 most visited🏆Get rateon Upstart's website on Upstart's website | 4.5 /5 Fast funding Flexible payments | 6.40-35.99% | $1,000-$50,000 | None | Top 3 most visited🏆Get rateon Upstart's website on Upstart's website |
on NerdWallet's secure website
Prosper
4.5
NerdWallet rating
Est. APR
6.99-35.99%
Loan amount
$2,000-$50,000
Min. credit score
560
See my rateson NerdWallet's secure website
on NerdWallet's secure website
LendingClub
4.5
NerdWallet rating
Est. APR
9.57-35.99%
Loan amount
$1,000-$40,000
Min. credit score
600
Get rateon Upstart's website
on Upstart's website
Upstart
4.5
NerdWallet rating
Est. APR
6.40-35.99%
Loan amount
$1,000-$50,000
Min. credit score
None
» MORE: Compare online personal loans and apply
What are peer-to-peer loans?
Peer-to-peer loans connect borrowers and investors directly. They became popular for borrowers, especially those with low credit scores, after the 2008 financial downturn when many traditional banks’ lending requirements tightened. Peer-to-peer offered a better chance to borrow money.
Today, the original “retail” form of peer-to-peer lending — where individual consumers invest in portions of loans — has evolved to include institutional lending, where institutions like hedge funds or insurance companies back the loans. LendingClub ended its program for individual investors and now facilitates institutional lending. Prosper still allows consumers to invest in fractions of loans.
» MORE: Best loans for fair credit
How does peer-to-peer lending work?
To get a peer-to-peer loan, borrowers follow the same process as they would for getting an online loan.
Retail and institutional peer-to-peer lending companies check eligibility through pre-qualifying, which involves a soft credit pull that doesn’t have an impact on your credit score.
Pre-qualifying allows you to select a loan amount and purpose while providing your name, date of birth and address. Then, you can see the annual percentage rate and loan terms you could be eligible for.
If you decide to apply, peer-to-peer lenders, like other lenders, confirm additional factors such as your credit score and credit history, which involves a hard credit check.
Features of peer-to-peer loans
Peer-to-peer loans are a type of online loan and share these common features:
Origination fee: This is an upfront fee that peer-to-peer lenders charge to cover the cost of processing the loan. The fee typically ranges from 1% to 10% of the loan amount.
Online experience: Peer-to-peer lenders allow borrowers to manage everything on the lender’s website, from applying for a loan and uploading documents to signing the loan contract and making monthly payments.
Since applications for peer-to-peer loans might be reviewed by multiple investors, they can take longer to fund than personal loans from banks or other online lenders — up to a week, in some cases.
Peer-to-peer loans for small businesses
Funding Circle and Kiva are peer-to-peer lenders that offer only small-business loans. FundingCircle is aimed at businesses that need funding to expand, while Kiva is better suited for micro businesses that are open to crowdfunding.
» MORE: Small business peer-to-peer loans
Can you get a peer-to-peer loan with bad credit?
Peer-to-peer loans can be an option for bad-credit borrowers (those with scores of 629 or below), but they may have higher interest rates. For example, a four-year, $15,000 loan with a 28.7% APR would have monthly payments of $529 and an overall interest cost of $10,383.
You can calculate average rates and payments using a personal loan calculator.
While lenders like LendingClub, Prosper and Upstart have minimum credit scores in the bad- or fair-credit range, you may be eligible for lower rates with a credit union or by pursuing a secured or co-signed personal loan.
How to pre-qualify for a peer-to-peer loan
You can pre-qualify for a peer-to-peer loan to see estimated rates and terms before you formally apply. The pre-qualification process usually involves a soft credit check, which doesn't have an impact on your credit score. You can pre-qualify on NerdWallet and compare loan costs and features from multiple lenders.
Last updated on December 4, 2023
Methodology
NerdWallet’s review process evaluates and rates personal loan products from more than 35 technology companies and financial institutions. We collect over 50 data points from each lender and cross-check company websites, earnings reports and other public documents to confirm product details. We may also go through a lender’s pre-qualification flow and follow up with company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. Our ratings award fewer points to lenders with practices that may make a loan difficult to repay on time, such as charging high annual percentage rates (above 36%), underwriting that does not adequately assess consumers’ ability to repay and lack of credit-building help. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodologies for personal loans and our editorial guidelines.
NerdWallet's Peer-to-Peer Personal Loans for Borrowers
- Prosper
- LendingClub
- Upstart
Insights, advice, suggestions, feedback and comments from experts
Introducing Peer-to-Peer Loans
As an enthusiast and expert in the field of personal finance and lending, I have a deep understanding of peer-to-peer loans and their significance in the financial landscape. Peer-to-peer loans, also known as P2P loans, are personal loans funded by individual investors or institutions, allowing borrowers to obtain financing directly from people or groups instead of traditional banks. This alternative lending method has gained popularity due to its accessibility and flexibility, especially for borrowers with lower credit scores.
Understanding Peer-to-Peer Loans
Peer-to-peer lending involves connecting borrowers and investors directly, offering an alternative to traditional banking institutions. After the 2008 financial downturn, peer-to-peer lending gained traction, particularly among borrowers with low credit scores, as it provided a viable option for obtaining loans when traditional banks' lending requirements tightened. Over time, the concept of peer-to-peer lending has evolved to include institutional lending, where entities like hedge funds or insurance companies back the loans. Notable platforms like Prosper and LendingClub have played a significant role in popularizing peer-to-peer loans in the U.S.
Key Concepts in the Article
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Best Peer-to-Peer Loans: The article discusses the best peer-to-peer loans from online lenders, highlighting platforms like Prosper, LendingClub, and Upstart as top choices for borrowers. These platforms offer competitive APRs, flexible payments, and varying loan amounts to cater to diverse financial needs.
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How Peer-to-Peer Lending Works: The article explains the process of obtaining a peer-to-peer loan, which involves pre-qualifying, soft credit pulls, and confirmation of additional factors such as credit score and history through hard credit checks.
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Features of Peer-to-Peer Loans: It outlines common features of peer-to-peer loans, including origination fees, online experience, and the potential for longer funding times compared to traditional personal loans.
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Peer-to-Peer Loans for Small Businesses: The article mentions peer-to-peer lending options for small businesses, such as Funding Circle and Kiva, catering to different business funding needs.
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Peer-to-Peer Loans for Bad Credit: It addresses the possibility of obtaining peer-to-peer loans with bad credit, highlighting the potential for higher interest rates and the availability of pre-qualification processes to estimate rates and terms.
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Methodology: The article provides insights into NerdWallet's review process for evaluating and rating personal loan products, emphasizing the assessment of consumer-friendly features, regulatory actions, and the impact on consumers' experiences.
Conclusion
Peer-to-peer lending has emerged as a viable alternative to traditional banking for obtaining personal and small business loans. The evolution of peer-to-peer lending, the features it offers, and the considerations for borrowers with varying credit profiles make it a dynamic and inclusive financial option.
If you have further questions or need additional information on any specific aspect of peer-to-peer lending, feel free to ask!
