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.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines
. This question was posted by WalletHub. Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.