Most people think of a bank or credit union for a business or personal loan. But peer-to-peer lending, also known as marketplace lending, lets you skip the middleman and get funded directly by investors, often at a lower rate.
Borrowers and lenders are connected through online P2P platforms, with applicants enjoying a simpler application, more flexible credit requirements, higher loan limits and faster funding than they’d get at a bank.
CNBC Select has picked the best peer-to-peer platforms, looking at key factors like interest rates, fees, loan amounts, term lengths and funding speed. For more on how we made our selections, check out our methodology below.
Shop for the right personal loan
Best for bad or no credit: Upstart
Who’s this for? Upstart allows borrowers with a 300 FICO Score ( the lowest possible) to apply for up to $50,000 and considers applicants with no credit history, as well. Its AI-powered underwriting model evaluates employment history, education and other factors.
Standout benefits: Borrowers can get approved for as little as $1,000 or as much as $75,000, the widest range on our list.
Upstart offers accessible personal loans for people with fair or average credit.
- Accept applicants with low or no credit
- No early payoff fees
- Most loans funded the next business day
- High late fees
- Origination fee of 0% to 10% of the target amount
- $10 fee for paper copies of loan agreement
Best for starting a small business: Kiva
Who’s this for? Entrepreneurs can raise up to $15,000 on Kiva. After a 15-day private funding period for friends and family, other lenders can contribute. If you get funded, you’ll have 36 months to repay your no-interest, no-fee loan.
Standout benefits: The nonprofit platform has no credit score requirement, but borrowers can choose to have their loan reported to Experian, helping them build business credit for later use.
Loans are geared toward borrowers who are unbanked and have trouble qualifying for financial products
- Ability to borrow with no interest
- Loans are geared toward borrowers who are unbanked and have trouble qualifying for financial products
- Ability to market your product to 1.6 million lenders on Kiva
- You need to prove your creditworthiness by inviting friends and family to lend to you
- It can take a while to receive your loan since investors need to raise money
- No BBB rating
Best for quick funding: Prosper
Who’s this for? Prosper’s easy-to-navigate application and AI-powered approval process mean borrowers can get funds as quickly as the next business day.
Standout benefits: Prosper approves loans for borrowers with a 560 credit score and accepts applicants with co-borrowers.
Repeat borrowers may qualify for an APR discount
- Approves loans of up to $50,000
- Repeat borrowers may qualify for an APR discount
- Borrowers can choose their payment date
- Co-borrowers permitted
- Higher maximum APR than other lenders
- Funding may take several days
- No direct payment to creditors
- Numerous fees
What’s a peer-to-peer loan?
A peer-to-peer (P2P) loan bypasses a bank or other traditional financial institution by having the borrower receive funding directly from an individual or company. That often means lower rates and higher loan limits for applicants.
P2P lending is popular among entrepreneurs whose businesses may not yet have an established credit history. For lenders, it offers a better return than a traditional savings account but defaults are more common and the funds are not FDIC-insured.
Bad credit? You can still get funding for major expenses.
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
Annual percentage rate (APR)
Pros and cons of peer-to-peer loans
Pros
- Lower interest rates
- Easier to qualify for with poor or limited credit
- Faster application and funding process
Cons
- Shorter terms, usually 60 months or less
- Fees may be higher than with a traditional personal loan
Peer-to-peer loan alternatives
LendingClub stopped offering P2P loans and now funds loans directly. It’s still worth considering, particularly if you’re looking for a debt consolidation loan, since it allows you to send funds directly to your creditors.
15-day grace period to make payments with no penalty
Loans start at $1,000 and can reach $40,000, with loan terms from 24 to 60 months. There is no prepayment penalty and borrowers can apply for a LendingClub loan with a co-applicant.
If you don’t want to commit to a long-term loan, you could consider a credit card with an intro APR offer, like the Wells Fargo Reflect® Card.
The Wells Fargo Reflect® Card can help you save on interest charges thanks to its extra generous intro-APR offer on purchases and qualifying balance transfers.
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- Apply Now to take advantage of this offer and learn more about product features, terms and conditions.
- 0% intro APR for 21 months from account opening on purchases and qualifying balance transfers. 17.49%, 23.99%, or 28.24% variable APR thereafter; balance transfers made within 120 days qualify for the intro rate, BT fee of 5%, min: $5.
- $0 annual fee.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
- Through My Wells Fargo Deals, you can get access to personalized deals from a variety of merchants. It’s an easy way to earn cash back as an account credit when you shop, dine, or enjoy an experience simply by using an eligible Wells Fargo credit card.
Balance transfer fee
Foreign transaction fee
Peer-to-peer lending FAQs
What are peer-to-peer loans?
Peer-to-peer lending is the process of getting a loan directly from investors, without a bank or financial institution acting as an intermediary. Borrowers are commonly connected to lenders via an online platform and enjoy lower interest rates, more flexible credit requirements and faster funding times.
Are peer-to-peer loans safe?
For borrowers, peer-to-peer loans are as safe as traditional loans. It’s the lenders who take on greater risk, as borrower defaults are more common and the money deposited for the loan is not FDIC-insured.
What’s the minimum credit score for a peer-to-peer loan?
P2P platforms have different standards: Some require a minimum credit score of 580 (considerably lower than what a bank or credit union would require) but others have no minimum credit requirement at all. In most cases, however, a higher credit score will improve your chances of receiving favorable rates and terms.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice to help them make informed financial decisions. Every personal loan list is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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Our methodology
To determine which peer-to-peer lenders are the best, CNBC Select analyzed dozens of U.S. personal loans offered by both online and brick-and-mortar banks, including large credit unions, that come with fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs.
When narrowing down and ranking the best personal loans for fair or good credit, we focused on the following features:
- Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. Fixed rates stay the same for the entire duration of the loan.
- Flexible minimum and maximum loan amounts/terms: Each lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
- No early payoff penalties: The lenders on our list do not charge borrowers for paying off loans early.
- Streamlined application process: We considered whether lenders offered same-day approval decisions and a fast online application process.
- Customer support: Every loan on our list provides customer service available via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
- Fund disbursement: The loans on our list deliver funds promptly through either electronic wire transfer to your checking account or in the form of a paper check. Some lenders offer the ability to pay your creditors directly.
- Autopay discounts: We noted the lenders that reward you for enrolling in autopay by lowering your APR by 0.25% to 0.5%.
- Creditor payment limits and loan sizes: The above lenders provide loans in an array of sizes, from $500 to $100,000. Each lender advertises its respective payment limits and loan sizes, and completing a preapproval process can give you an idea of what your interest rate and monthly payment would be for such an amount.
After reviewing the above features, we sorted our recommendations by best for debt consolidation, no or limited credit history, quick funding and small business.
Note that the rates and fee structures advertised for personal loans are subject to fluctuation in accordance with the Fed rate. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness. Before providing a loan, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.