Lending Club and Prosper.com are two companies which operate peer-to-peer lending marketplaces which allow borrowers to take out unsecured loans from other members of the site that act as lenders. Both marketplaces operate with slightly different lending modules in how interest rates are determined and what the fee structure looks like, borrowers should be aware of what they will have to pay in fees to help determine which peer to peer lending website they should go with if they opt for a peer to peer loan.
Lending Club:
Lending Club charges borrowers an origination fee (a one-time fee which is charged when the loan is created) of 2.25% to 4.50% depending upon the borrower’s credit rating. Borrowers that are self employer or who take out loans for small businesses also have to pay a 1.5% additional origination fee to cover what Lending Club refers to as “the extra costs of screening these particular loan applications.”
Prosper.com also charges an origination fee. Borrowers with “AA” credit ratings are given a sweet-heart deal of a 0.5% origination fee. All other borrowers are stuck with paying a 3.0% origination fee, with a minimum fee of $50.00.
Late Fees:
Both Prosper.com and Lending Club also charges borrowers an “unsuccessful payment fee” of $15.00 when an automatic payment from the borrower’s checking account fails.
In regards to an actual, “late fee” for borrowers, both Prosper.com and Lending Club offer a 15-day grace period. After that period, both companies charge the 5.00% of the unpaid installment amount or $15.00, whichever is greater.
Conclusion:
Depending where you are at in your credit standing, either company may be a better deal. Prosper has the lowest fees for some of the best borrowers, but Lending Club has lower fees for borrowers with A and B credit ratings. Customers with C credit ratings and lower would likely have to pay less of an origination fee on Prosper.com
