SoFi vs. Prosper: Which Is Right for You?

SoFi and Prosper both have a great reputation for customer service. They both offer personal loans with fast funding and provide borrowers with flexible options. So which is better?

Prosper may be a better option for fair credit borrowers than SoFi — it considers applicants with FICO scores as low as 600. But SoFi offers larger loan amounts and longer repayment terms. You'll also get more perks if you choose SoFi, but Prosper is a better option if you need a small loan of less than $5,000.

SoFi personal loans

SoFi is a financial technology company and bank that offers several banking, investing, and loan products. When you take out a loan from SoFi, you get access to unique membership benefits, like free advice from a financial planner, discounts on home loans and estate plans, travel benefits, and rewards for referrals. Plus, you may be eligible for multiple rate discounts, some of which can be stacked:

• Autopay discount: 0.25% interest rate reduction for setting up autopay on your loan
• Direct deposit discount: If you have a SoFi Checking and Savings account with a minimum $1,000/month payroll direct deposit, you may receive a 0.25% interest rate reduction on your personal loan
• Direct pay: If you're paying off credit cards with the loan and have SoFi send the funds directly to creditors, you could receive a 0.25% rate discount

SoFi offers personal loans up to $100,000 with no required fees — the lender doesn't charge fees for late payments — but you may opt to pay an origination fee to get a lower interest rate. This could reduce the overall cost of the loan in some situations.

SoFi also offers fast funding as soon as the same business day if you sign your approved application before 7 p.m. ET on a business day. Same-day funding is not available if you're refinancing a personal loan or having funds routed directly to your creditors for debt consolidation.

Prosper personal loans

Prosper is a peer-to-peer lending platform that connects borrowers with investors. Loans are issued by WebBank, which sells the loans to Prosper. Prosper then sells the loans to investors.

More than $27 billion in loans have been issued through the platform since the company was founded in 2005. Prosper caters to borrowers who need loans for fair credit, utilizing proprietary machine learning technology to approve applicants with credit scores as low as 600.

Prosper offers personal loans from $2,000 to $50,000 with low starting rates, but borrowers are subject to an origination fee from 1% to to 9.99% in addition to late payment fees and other potential charges. You can use the funds for almost anything, including debt consolidation and business expenses — Prosper only restricts borrowers from using a personal loan for college educational expenses (like most all lenders). The lender offers funding as soon as the next business day.

Tips on choosing between Prosper and SoFi

If you're not sure whether to apply with Prosper or SoFi, consider the factors below.

APR range and fees

Rates for both Prosper and SoFi loans start at 8.99% APR, but SoFi caps APRs at 29.99% and Prosper charges up to 35.99% APR, including an origination fee of up to 9.99%, depending on your credit. Both lenders allow you to prequalify without hurting your credit, so it's worth comparing your individual estimated rate with each lender.

Minimum credit score

SoFi doesn't disclose a minimum credit score, but fair credit borrowers may have better luck with Prosper. Prosper may accept borrowers with a FICO score as low as 600.

Loan purpose

Both SoFi and Prosper offer personal loans for a wide range of purposes, including:

• Debt consolidation
• Medical and veterinary bills
• Home improvement
• Emergency expenses
• Vacations and weddings
• Vehicle purchases

However, SoFi has more restrictions than Prosper. Neither lender allows borrowers to use the funds for college expenses, but SoFi also prohibits borrowers from using the funds for business purposes, real estate, and investments.

Repayment terms

SoFi offers longer repayment terms than Prosper. With Prosper, you may have a choice of repayment terms between two and five years, while SoFi offers terms up to seven years. SoFi might be a better option if you need a lower monthly payment or you're taking out a large loan.

Loan Amount

SoFi offers loans up to $100,000, so the lender may be a better option if you have a big expense like a home remodeling project (if you can qualify for a $100,000 loan). Prosper, on the other hand, has a lower minimum loan amount than SoFi, so Prosper may be a good choice if you need less than $5,000 to cover an expense.

Time to fund

If you need an emergency loan, SoFi is likely the better option. About 82% of applicants who sign their SoFi loan agreement by 7 p.m. ET on a business day receive same-day funding, according to SoFi. (Loans used to refinance credit cards or an existing personal loan may not qualify.) That said, Prosper also offers relatively quick funding, issuing funds as soon as the next business day.

How to apply for a personal loan

1. Check your credit score and determine your budget for repayment
2. Prequalify on each lender's website or through a personal loan marketplace
3. Compare the monthly payment and total interest of each loan option
4. Pick the lender and repayment term that best meet your needs
5. Authorize a hard credit check and complete the formal application
6. If approved, review the loan agreement carefully before signing
7. Receive the cash in your bank account or have it routed to your creditors

Which Lender Is Best for You?

SoFi and Prosper are both highly-rated companies that offer personal loans with low starting rates, fast funding, multiple repayment term options, and the ability to apply with a co-applicant if you can't qualify on your own. But depending on your financial situation and how you plan to use the funds, one of these lenders may be a better fit for your needs than the other.

Best for no fees: SoFi

SoFi doesn't require you to pay any fees. The lender doesn't charge late payment fees, and an origination fee is optional. Prosper charges an origination fee and other potential fees, so if you're looking for a fee-free personal loan, go with SoFi.

Best for fair credit: Prosper

Prosper's peer-to-peer lending model and proprietary technology mean that fair credit borrowers may have a better chance of getting approved. Prosper requires a minimum credit score of 600. SoFi doesn't disclose a minimum credit score requirement, but Credible data suggests that fair-credit borrowers are unlikely to be approved with SoFi.

Best for large loans and long repayment terms: SoFi

If you need a large loan or extra time for repayment, SoFi may be the right choice. SoFi personal loans are the only option (between the two) for a loan larger than $50,000 and a repayment term longer than five years.

Best for small business expenses: Prosper

Business loans generally offer lower rates and larger loan amounts than personal loans, but it can be difficult for startups to qualify. If you need to fund a new business venture, an unsecured personal loan from Prosper may be a good option. SoFi doesn't allow borrowers to use personal loans for business expenses.

Best for small loan amounts: Prosper

If you need to borrow less than $5,000, choose Prosper. It's often best to borrow no more than what you need to keep monthly payments and debt levels low. SoFi's $5,000 minimum loan amount is relatively high compared to most personal loan lenders.

Best for extra perks and discounts: SoFi

If you qualify for both SoFi and Prosper at similar rates and need to break the tie, it's worth considering the array of member benefits, discounts, and attractive loan features that SoFi offers. From free financial planning to refinancing opportunities to referral bonuses, SoFi offers more perks for borrowers than most other online lenders.