Let me start by saying that Prosper.com and other peer-to-peer lending sites provide a fantastic product.? Peer-to-peer lending is among the most enjoyable developments of the internet age.? By permitting many strangers to get together in this way, people are capable of getting a great return on their own investments, and they are also in a position to borrow without getting beat up through the banks.? Essentially, prosper.com eliminates the middle-man, aka the banks, and allows borrowers and investors for connecting in a more direct manner.
Despite the excellent platform that prosper.com provides, it’s not yet ready to handle student loans or education loan consolidation.
Why Prosper to consolidate student education loans?
It is definitely an concept that frequently gets suggested, there are a number of reasons.? First, Prosper.com advertises itself as a spot to choose consolidation of debt.? Second, student loans really are a huge burden for many, and Prosper seems to be an innovative solution.? Third, education loan borrowers as a group appear to be especially fed up with banks and giant lenders, there appears to be a certain appeal in paying interest to regular people rather than a major corporation.
Why doesn’t Prosper make the grade?
Prosper.com at this moment isn’t really capable of handling student loans.? If you consolidate with Prosper, your brand-new loan isn’t an education loan at all, it might be unsecured debt.? While this is a good thing for a perspective borrower, it means the debt is really a much riskier proposition for the lender.? That means higher rates of interest.? Student education loans are “lower risk” investments because they have almost non-existent bankruptcy protection.? The problem obtaining a bankruptcy is part of why lenders are able to offer such low rates on student loans and consolidation.
As of the writing.? The cheapest rate of interest offered by Prosper.com is 6.74%.? While this number is excellent for charge card consolidation, it’s abysmal for education loan consolidation.? Furthermore, in order to entitled to the 6.74%, borrowers need to have a great credit/income status.? Individuals with such fantastic credit scores and incomes will probably find lower rates elsewhere for his or her student education loans.? Finally, Prosper will lend no more than $35,000 for any more 5 years.? For individuals looking to consolidate their student loans, they’ll likely require more money, and much more time to repay it.
The Bottom Line
People looking to get creative using their student loans are definitively a good idea to consider Prosper.com; theoretically it can make lots of sense.? Unfortunately, the Prosper structure just isn’t capable of handling student debt and it is many unique characteristics.
For borrowers seeking to secure low rates and avoid banks, their options are likely best served by options like SoFi?and LendKey.
However, for those who have personal debt such as charge cards, investigating your very best rates at Prosper.com could be a wise decision.