The Marketplace Loan Math

Peer-to-peer lenders — LendingClub, Prosper, and the platforms that followed — match borrowers directly with investors instead of lending a bank's money. For the borrower, the economics are a marketplace personal loan: a fixed APR based on your credit tier, a fixed monthly payment, and an origination fee deducted from the money you actually receive. That last detail is where borrowers get surprised. A 12% rate with a 5% fee means a $10,000 loan delivers only $9,500 to your account while your payment amortizes the full $10,000 — pushing the true cost above the advertised rate. Rates also vary widely by grade: marketplace loans for prime borrowers can beat bank rates, while lower grades can exceed 25%, where a credit union or credit card balance transfer is usually cheaper.