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Do Marketplace Lending Platforms Offer Lower Rates to Consumers? Accessible Data
Figures 1 and 2:
Figures 1 and 2 show average interest rates for Lending Club and Prosper loans along with average credit card interest rates for households from Mintel for the fourth quarters of 2016 and 2017. Average rates for each platform are calculated for nine credit score bins. Mintel average rates are calculated for similar credit score bins. I consider two quarters to show the stability of loan pricing.
The teal line represents average credit card offer interest rates from Mintel. Average Mintel rates range from over 21 percent for the lowest credit score bins to around 15 percent for the highest credit score bin.
Lending Club and Prosper average rates are represented by green and purple lines, respectively. Lending Club rates range from 15.5 percent for lowest credit score bins to 7.2 percent for highest credit score bins. Prosper rates range from almost 21 percent for lowest credit score bins to 6.8 percent for highest credit score bins.
For all credit score bins, Lending Club and Prosper average rates are substantially lower than average credit card rates. Relative to Lending Club, Prosper tends to give somewhat higher interest rates on low credit score loans and lower interest rates on higher credit score loans.
Figures 3 and 4:
Figures 3 and 4 compare the APRs for Lending Club and Prosper to credit card interest rates for the fourth quarters of 2016 and 2017.
Mintel average credit card APRs range from 21 percent for the lowest credit score bin to 15 percent for the highest credit score bin.
Lending Club APRs range from about 19 percent for the lowest credit score bins to about 13 percent for the highest credit score bins. Prosper APRs range from over 23 percent for lowest credit score bins to about 9 percent for highest credit score bins.
Figures 5 and 6:
Figures 5 and 6 show average quarterly interest rates and APR spreads for each platform.
For Lending Club, average interest rate and APR spreads ranged from around negative 400 to negative 800 basis points and from around negative 100 to negative 450 basis points, respectively, over the past couple of years. For Prosper, average interest rate and APR spreads ranged from around negative 250 to over negative 600 basis points and from around 100 to negative 300 basis points, respectively, over the past couple of years.