Prosper’s interest rates are part of their overall APR, which ranges from 6.95% to 35.99%. The interest rate is always less than the annual percentage rate because the APR also accounts for Proper’s origination fee (the fee charged to process the loan). The origination fee can range from 2.41% to 5% of the loan amount.
Essentially, your Prosper interest rate is your APR if you take away the origination fee. But it’s not as simple as just subtracting the entire origination fee from the APR. The APR indicates the cost of finance charges over the course of a year, while the origination fee is spread across the entire loan term. This affects the math a bit.
Here’s an example from Prosper’s website: “A three-year $10,000 personal loan with a Prosper Rating of AA would have an interest rate of 5.31% and a 2.41% origination fee for an annual percentage rate (APR) of 6.95% APR.”
In all, though, it’s really not necessary to separate Prosper’s interest rates from their APRs. You’ll only be making payments based on the APR. But some lenders don’t charge origination fees. So in many cases a personal loan’s interest rate can be the same as its APR.
For a more in-depth look at Prosper personal loans, check out WalletHub’s review.
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