What's going on Friends. Welcome back to another edition of Currency Accounts, where I cover all things money from how to save Money, make More Money side hustles, and everything in between.
In today's Article, we're going to COVID a peer to peer lending product that offers loans of up to $40,000. And best of all, there's no minimum income verification. At the end of this video, I'm going to show you everything you need to actually qualify.
So stay tuned. Alright, so I'm here at their website, Prosper. So what is Prosper.com and how does it work? Well, it's a peer to peer lending website, so you as an individual could actually invest and see a return on your investment by way of lending people money, but you're not actually picking out and choosing who you can lend people money to.
You're investing into a big pool of money and then Prosper is actually making the loans out. Prosper investment isn't available in all states, meaning not just anybody can invest. Also, institutions are allowed to invest in these funds. Through Prosper, people can invest in each other in a way that's financially and socially rewarding. Individuals and institutions can invest in loans and earn attractive returns. Prosper handles all the loan servicing on behalf of the match borrowers and investors.
Francisco Partners, Institutional Venture Partners and Credit. Susie Next fund or Susie Next fund? These are the main backers of the peer to peer lending, which if you're an investment firm, you're really not a peer anymore. So it's taking out that peer to peer part of it. All right, so that's enough with the lending. Let's get to the borrowing because that's what this Article is about. Prosper actually has a few products, personal loans and a home equity line of credit.
The HELOC, I probably would stay away from. Never take out a HELOC to consolidate debt or use that money for anything else, but maybe starting a business or home construction remodeling, something like that. You don't want to put more debt onto your home because they're going to put a higher rate than what you're actually paying right now on your home. Plus, that loan is amortized and it's probably going to be amortized for another 30 years.
So you're going to end up spending a crazy amount more in interest than what you're actually paying on your debt right now. And the will actually comment, guys, please save me the time. Unless you've been through it, don't speak on it. New next day funding now available.
Get your funds as soon as one business day after completing requirements fast, flexible, and worry free. All right, I like that. I like the sound of that. Imagine the possibilities with a personal loan. With the flexibility and ease of a personal loan through Prosper, you're free to reach your next big milestone.
Which dream will your loan help you bring to life? How it works. Check your rate, choose your loan, get your funds. So you have an example here of a credit card versus a personal loan. So you have your fixed interest rate,
simple payment plan, and set payoff date with your credit card. You have the variable interest rate, no clear payment plan, and longer pay off. So you can borrow from $2000 to $40,000. On their landing page right here, it says, how much do you want to borrow? Let's say $40,000. All right, I want to borrow a full 40 G. Let's see what it gives me here.
What do you want the loan for? Business. See loan options continue to your application. Loan options up to a million dollars. Okay, well, you need at least $100,000 in annual revenue with at least one year in business. All right, that's for another Article.
But let's go to something else. All right, just me. All right, so when you enter all your information down here, it says this will not affect your credit score. All it's doing is going to give you a soft pull on your credit report so you can see how easy it really is to apply.
All you need to do is apply online, check your rate, accept the terms. Once you accept the terms, they're going to ask you for some additional information like verification of employment. And your rate is going to be anywhere from 7.95 to 35.99, which at 35.9, that's pretty high.
The funding bank of this loan is WebBank. WebBank also funds Avant Lending Club, Shopify and the Pedal credit builder card. You will have a fixed interest rate of three to five years. And the kicker here is there's a 5% origination fee. So for example, if you get approved for $40,000, that's pretty high. Look at that. $2,000 on a $40,000 loan origination fee.
It has nothing to do with interest. It has nothing to do with any other type of fees. That's actually just for funding you the loan. You're paying $2,000 right off the bat. So let's do a loan example. If you get funded for a $10,000 loan at a 15% interest, you'd receive $9,500. You wouldn't even receive the full $10,000 because you got to remember, you have that 5% origination fee.
In this case, it's $500, and you'd be paying $330.90 for 36 months. Let me get my calculator here. All right, let's see here. See if this works. All right. It works. Does it work? I just need the regular calculator. Basic calculator. Come on, give it to me.
I have the craziness calculator. I haven't used this in a while. So let's see here. You'd end up paying $11,912 back. So you'd be paying $2,412 in interest plus your $500 origination fee. So you're looking at $2,912 total in interest and fees that you'd be paying.
So this loan is amortized. If you're not sure what amortized is and you're trying to take out a loan, go look into it, because I can go on a sidebar 1015 minutes on amortization. But basically if you're looking at a $10,000 loan and you're looking at 15% quick math, you're saying, okay, well, I'm only going to pay $1,500 in interest.
No, amortization means you're going to pay a lot more than that. Right here. At the end of everything, you're looking at about 30%. All right, enough of that. Just be aware of amortization when you're taking out any type of loan. Once you get approved, you can get funded in as little as one business day. Payback for the loan is easy.
You can either set up direct withdrawal from a linked bank account, or you can make your payment by check or through the app. There is going to be a $5 check fee. If you send in a paper check, they're going to charge you $5 for that. There's also a $15 late fee and a $15 NSF fee.
All right, so let me tell you exactly what you're going to need to qualify for this loan. You're going to need at least a 600 credit score, a debt to income ratio of no more than 50%, which means if you make $50,000 a year, you can't have more than $25,000 in debt. You need at least three accounts open on your credit report, anywhere from credit cards to personal loans or other types of loans, and no more than five credit inquiries within the past six months.
You don't need a minimum income to qualify, but obviously, the higher the income, the more you will get qualified for a minimum credit history of five years, your SSN, and a bank account. That's it. If you can provide all those things, you more than likely will get approved for this loan. So look, the higher your credit score and the more income you report on your application, the more likelihood you're to receive a higher credit limit. But you got to remember, a higher credit limit isn't always a good thing.
It's not good to take out more money than you actually need, because in this case, you're going to have a 5% origination fee. So the higher your credit limit, the more you're going to have to pay an origination fee. And the higher the credit limit, the higher your interest is going to be. So at the end of the loan, you're going to end up paying back a lot more.
So there it is. My prosper peer to peer personal loan review. Say that three times fast. So I want to thank you for watching. Don't forget to check out all my other loan reviews. But hold on. Don't go yet. If you want to make $75 by opening up a check account,
all you have to do is click the link in my description, sign up for Chime, and once you make a deposit totaling $400, you'll receive $75 into your account, absolutely free for doing nothing else but depositing money into your account. So click the link in the description right now. Thanks for watching. Check you in the next one.