What interest rate should I specify?

When you create a listing, you specify the maximum interest rate that you are willing to pay, and lenders bid the interest rate down, unlike some other auctions where the price is bid up. Prosper displays average interest rates on funded loans, which can serve as a useful guide in determining what kind of interest rate you can expect.

Successful borrowers usually set a starting rate which is a few percentage points higher than past rates for their credit grade, group status, and amount requested. For example, if the historical interest rates chart says that borrowers with your credit grade, group status, and loan amount are getting interest rates around 12%, you might start the bidding on your listing around 14% to attract more lenders. Keep in mind, however, that the listing could close at the starting rate, so only specify a starting interest rate that you are prepared to pay.

What does it cost to borrow money?

There is one standard fee for obtaining a loan through Prosper. You will have to pay a fee of 1% of your loan amount if your loan is matched and funded. The 1% fee is deducted from the amount of your loan at origination. For example, if you asked for a $5,000 loan, the 1% closing fee would be $50, and the total amount you would receive at loan closing would be $4,950.

After your loan is funded you will, of course, have to pay interest on your loan. As long as you make timely loan payments, you will not have to pay any other fees.