Best Peer-to-Peer Personal Loans in September 2024

If you need a loan and want an alternative to traditional banks, the peer-to-peer marketplace might be for you—especially if you have credit that’s either excellent, or poor.

Peer-to-peer (P2P) lending, first introduced in the early 2000s, is a type of loan where individual investors lend money to borrowers through a dedicated platform, outside of a traditional financial institution. It became an attractive option for borrowers with no credit history, a low credit score, or who need funds fast for an emergency expense.

But beware—with P2P lending, interest rates tend to rise with the loan amount. And often, these rates can exceed those of credit cards or other types of consumer debt.

Today most peer-to-peer platforms have shifted to a traditional lender model, but a handful still exist. Here are the best available today, what each offers, and some alternatives to consider.

Our recommendations for the best peer-to-peer personal loans

Best for high borrowing limits: Prosper

Best for debt consolidation: LendingClub

Best for low (or no) credit score: Upstart

Best peer-to-peer personal loans compared

Tips to compare peer-to-peer loans

When considering whether to get a peer-to-peer loan, you should compare them to other types of consumer debt, using the following features as guidelines:

• Borrowing limits: The best lender may depend on how much you need and how you plan to use the money.
• Interest rate: The lower your interest rate, the less you’ll pay over the course of your loan’s repayment. Try to secure the best interest rate possible.
• Repayment terms: Your loan’s terms will dictate how much you pay each month over the course of your repayment. Be sure to calculate how much you can afford to pay monthly.

Alternatives to peer-to-peer loans

Not sure whether a peer-to-peer loan is right for you? Here are some other options to consider.

• Traditional personal loan: While P2P and personal loans are very similar, the platforms that offer them differ. In some cases—especially for creditworthy borrowers—taking out a personal loan through a traditional lender will be more affordable.
• Pull from savings: By drawing on your savings instead of borrowing, you can save hundreds, or even thousands of dollars in interest without affecting your credit.
• Borrow from your credit line: If you have access to an existing line of credit, you may be able to borrow money at a lower interest rate, without having to apply for a new credit product.

More about peer-to-peer loans

Want to know even more about peer-to-peer loans? Here’s a breakdown.

What is a peer-to-peer loan?

A peer-to-peer loan is a type of loan where individual investors lend money to borrowers through a dedicated platform. While these marketplaces were a lot more common in the early 2000s, they have begun to phase out with many platforms opting for a traditional lender-borrower model.

How does a peer-to-peer loan work?

With a peer-to-peer loan, investors lend money to individual borrowers or small businesses. As those borrowers repay the debt, the investor recoups their investment, in addition to an agreed interest rate.

Peer-to-peer loans: Pros and cons

How to apply for a peer-to-peer loan

The loan application process will depend on the platform you choose. In general, though, you’ll need to provide personal information such as your name, address, phone number, birthdate, and Social Security number. You may also need to provide an explanation, summary, or even projection of how those funds will be used, especially if you are planning a specific project.

TIME Stamp: Peer-to-peer is quick and easy, but consider costs

While peer-to-peer platforms were quite popular a decade or so ago, they are becoming less common. The P2P marketplaces that remain offer borrowers a way to access the personal funds they need quickly and efficiently, often with competitive rates and terms. But it’s still important for borrowers to calculate their total cost before committing, as rates and fees can be as high as with other forms of consumer debt.

Frequently asked questions (FAQs)

Is peer-to-peer lending safe?

As a borrower, peer-to-peer lending can be a safe borrowing method, as long as you choose a reputable platform. As an investor, it’s important to remember that all investing and lending comes with risk—so there is no guarantee that you’ll make money or even recoup the funds. However, lending on a reputable P2P site can give you peace of mind that you won’t be scammed.

How to pre-qualify for a peer-to-peer loan

In order to qualify for a peer-to-peer loan, you’ll need to meet the lender’s specific requirements. This often means being 18 or older, having a valid U.S. address, being a U.S. citizen, and having a minimum credit score and/or income. If you’re unable to qualify on your own, you may be able to add a creditworthy co-borrower. Many platforms allow you to pre-qualify online and check your rate without affecting your credit score.

What is the maximum amount for a peer-to-peer loan?

Loan amounts vary depending on lender limits and the characteristics of individual borrower. Some lenders, such as Prosper and Upstart, allow you to borrow up to $50,000.

What is the minimum credit score for peer-to-peer lending?

Most lenders want borrowers to have a good or great score, which often means 600 or higher. A few peer-to-peer lenders, such as Upstart, have minimum credit score requirements as low as 300, if they even require a score at all.

Can you invest and generate profits through peer-to-peer loans?

Some investors use P2P lending platforms to diversify their investment portfolios. And while many have profited, there are risks involved and you could lose your money. Never invest more than you can afford to los, and understand the level of risk involved and the timeframe of the investment (how long your money is tied up for.)

Can you get a peer-to-peer loan with bad credit?

Borrowers with bad credit may qualify for some peer-to-peer loans, depending on the platform and even the willing investors. However, borrowers with bad credit should expect to pay more in interest.