Prosper update
I've been participating (investing?) at Prosper for several months now. I've received the payment every month on time, and started building up a small cash balance. So far it seems to be working out well.
I decided to transfer in a bit more money, just enough to bring my balance up to $100.00 including what was in the account already from payments received. I've since bid on 2 more loans for $50.00 each. The loans have closed and are pending review.
So far I've made 3 $50.00 loans.
Loan #1: 20.00% interest
Loan #2: 17.95% interest
Loan #3: 16.40% interest.
Now, before I get accused of being a loan shark, remember that these interest rates are set by the market forces in play at Prosper. The borrower posts the amount he needs and an explanation about why he needs it and what he plans to do with it, along with a maximum interest rate he will pay. They also show a very high level credit report on the borrower, along with a letter grade to summarize his credit history.
The market (lenders at Prosper) then start to bid on his loan - how big a piece of his loan they will take, and the lowest interest rate they will accept. The more people that deem the borrower a good risk and participate, the lower the rate goes, like a reverse Ebay. Every loan I bid on completed at a rate higher than the lowest rate I said I would accept in my bid - at least 2 points higher or more.
Obviously I'm still cautious about Prosper, but let's say that I'm cautiously optimistic.
I decided to transfer in a bit more money, just enough to bring my balance up to $100.00 including what was in the account already from payments received. I've since bid on 2 more loans for $50.00 each. The loans have closed and are pending review.
So far I've made 3 $50.00 loans.
Loan #1: 20.00% interest
Loan #2: 17.95% interest
Loan #3: 16.40% interest.
Now, before I get accused of being a loan shark, remember that these interest rates are set by the market forces in play at Prosper. The borrower posts the amount he needs and an explanation about why he needs it and what he plans to do with it, along with a maximum interest rate he will pay. They also show a very high level credit report on the borrower, along with a letter grade to summarize his credit history.
The market (lenders at Prosper) then start to bid on his loan - how big a piece of his loan they will take, and the lowest interest rate they will accept. The more people that deem the borrower a good risk and participate, the lower the rate goes, like a reverse Ebay. Every loan I bid on completed at a rate higher than the lowest rate I said I would accept in my bid - at least 2 points higher or more.
Obviously I'm still cautious about Prosper, but let's say that I'm cautiously optimistic.
posted by learningtowrite | 8:31 PM
3 Comments:
I've been lending on Prosper for about seven months now, with great success. I've blogged about my experince at http://joelodom.blogspot.com/2006/10/my-experience-with-prosper.html.
Oh to have the money to invest...
@Joel
Thanks for the link. I checked out your weblog and I'll be checking in from time to time.
@corey
(Realizing I sound like a broken record) That's the great thing about Prosper. 50 minimum to buy into a loan. You can ease into it.
I really, really, really wish they had a referral fee program. I rave about them all the time because I love it so much.
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