With peer-to-peer (P2P) lending, also known as marketplace lending, borrowers are funded directly by investors, often at a lower rate than they'd receive at a bank or credit union.
P2P platforms also offer a streamlined application process and more flexible credit requirements.
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.
Best peer-to-peer loans
Best for bad or no credit: Upstart
Who's this for? Upstart allows borrowers with any (or no) credit score to apply for up to $50,000. Its AI-powered underwriting model evaluates employment history, education and other factors rather than credit.
Standout benefits: Borrowers can get approved for as little as $1,000 or as much as $75,000, the widest range on our list.
We like that Upstart considers factors besides credit score, including education, income and employment history. However, co-signers aren't accepted.
- Accept applicants with bad or no credit
- Minimum APR is lower than many competitors'
- Approves personal loans up to $75,000
- Most loans are funded the next business day
- Origination fee of 0% to 10%
- Doesn't allow co-signers or co-borrowers
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, especially business owners, who are unbanked and have trouble qualifying for financial products.
- 0% interest and no fees
- No minimum time in business or annual revenue required
- No credit score requirement
- Can reach community of 1.6 million Kiva lenders
- Low lending limit
- Personal guarantee required
- Borrowers need to crowdfund from their network
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.
You can sign with collateral or a co-borrower to better your approval odds and secure a lower rate. Funding can be quick.
- 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 is a peer-to-peer loan?
A peer-to-peer (P2P) loan is a personal loan that bypasses a bank or other traditional financial institution and provides funding directly from an individual or group of investors. (Some P2P loans are funded by institutional investors.)
The P2P platform reviews your credit profile, income and other factors and, if approved, your loan is funded by one or more investors. Like a traditional loan, you make fixed monthly payments, including interest.
P2P loans are most commonly used for debt consolidation, home improvements, medical expenses and major purchases. They are usually unsecured, so borrowers don't need to put up collateral like a car or home.
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 borrowers may default and the funds are not protected by FDIC insurance.
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
6.30% - 35.99%
$1,000 to $75,000
9.95% to 35.99%
$2,000 to $35,000
Peer-to-peer loans vs. traditional personal loans
While P2P and traditional personal loans both provide borrowers with funds that are repaid in fixed monthly installments, there are several key differences in who issues the loan, how they are funded, and the borrowing experience.
Lender: Traditional personal loans are issued by banks, credit unions and online lenders. Peer-to-peer loans are funded by individual or institutional investors through an online lending platform.
Loan amount: Traditional lenders typically have higher loan limits, often as high as $100,000 for qualified borrowers with strong credit. P2P platforms typically cap personal loans at between $35,000 and $50,000.
Credit requirements: Banks and credit unions often have stricter credit and income standards than P2P platforms.
Interest rates: With traditional loans, interest rates are largely based on your credit score, income and debt-to-income ratio. Peer-to-peer loan rates depend on your credit profile and the lending platform's underwriting criteria.
Application process: Peer-to-peer loans are typically completed entirely online with a streamlined application. Depending on the lender, traditional personal loans can be completed online, in person or over the phone.
Funding timeline: Traditional loans can be funded the same day or next business day, depending on the lender. Because they can rely on multiple lenders, peer-to-peer loans can take up to five business days to fund.
Customer support: Many banks and credit unions offer robust phone, online and in-branch customer service. Peer-to-peer lenders have more limited support, primarily provided through online chat and phone.
How to choose a peer-to-peer loan
Choosing a peer-to-peer (P2P) loan is about more than just the rate you're being offered. It means considering the total cost, the lender's reputation and whether the loan fits your financial situation. Here are the main factors to consider:
- Compare the Annual Percentage Rate (APR): The APR includes both the interest rate and many fees, making it the best measure of your overall cost. A lower APR usually means you'll pay less over the life of the loan.
- Review applicable fees: Look at origination fees, late fees and returned payment fees. While most lenders don't charge prepayment penalties, it's worth confirming.
- Choose the right loan term: Longer terms reduce monthly payments but increase the total amount of interest paid. Shorter terms typically have higher monthly payments, but you'll pay less in interest overall.
- Review eligibility requirements: Finding the best rate doesn't mean anything if you don't qualify. Look at the requirements for credit score, income, employment history and debt-to-income ratio.
- Evaluate the platform: Rates, terms and eligibility are crucial, but you should also do due diligence on how long the platform has been operating, how transparent it is about rates and fees, the availability of customer support and how it's rated in customer reviews and its Better Business Bureau grade.
- Know how quickly you'll receive funds: P2P loans can take longer to fund than traditional online loans, so find out how long the platform typically takes to deposit the money.
- Inquire about repayment flexibility: Check whether you can change your payment date if you need to, make extra payments without penalties, and access financial hardship assistance if you have trouble making payments.
- Read the loan agreement carefully: Before accepting the loan, review the payment schedule, interest calculation, default terms, collection practices and any conditions that could change the cost of the loan
Pros and cons of peer-to-peer loans
- Lower interest rates
- Easier to qualify for with poor or limited credit
- Faster application and funding process
- Shorter terms, usually 60 months or less
- Often lower loan limits
- 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 worth considering, particularly if you're looking for a debt consolidation loan, since it allows you to send funds directly to your creditors.
Formerly LendingClub, Happen Bank offers competitive rates on a wide range of loan amounts, with funds available in as little as 24 hours after final approval.
- Accepts borrowers with fair credit.
- High loan limit of $75,000.
- Funds may be available in as little as 24 hours.
- Repayment terms range from two to seven years.
- Co-borrowers are permitted.
- Doesn't accept co-signers.
- Origination fee of 2% to 6% of the loan amount.
- No autopay discount.
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 is one of the absolute best cards you can apply for if you want to save on interest and pay down debit quickly thanks to its extra generous intro-APR offer on purchases and qualifying balance transfers.
- Incredible intro-APR for purchases and qualifying balance transfers
- No annual fee
- Cell phone insurance: up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible
- No rewards
- No welcome bonus
- High balance transfer fee
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
5%, min: $5
Foreign transaction fee
3%
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.
How much does a peer-to-peer loan cost?
P2P loans charge interest just like any other loan. They may also come with an origination fee, late payment fee and an early payoff fee. Always check your lender's terms to understand all the fees you may be charged.
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 the best peer-to-peer lenders, CNBC Select reviewed the top online lending platforms on a variety of criteria, including:
- APRs
- Fees
- Loan amounts
- Eligibility requirements
- Repayment terms
- Application experience
- Funding speed
- Availability of customer support
- Length of time in business
- Customer reviews, when available
We also considered CNBC Select audience data when available, such as general demographics and engagement with our content and tools.
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