Prosper.com
Prosper.com is an online community to facilitate peer-to-peer loans. At the basic level, it works as a method for borrows to post their monetary needs and interest rate they’re willing to pay for that amount, and lenders bid on the loans.
The full loan is comprised of smaller loans from individual lenders. Each lender specifies how much they’re willing to fund the loan, and when the loan is completely funded, the bidding begins on the interest rate. As the time limit of the auction dwindles, new lenders compete by decreasing their acceptable interest rate. When the bidding process is complete, the loans are compiled into one monthly payment for the borrowers, which is deducted directly from their checking account.
Prosper.com for Borrowers
As a borrower with prosper.com, you’ll have to go through several hoops in order to join and borrow money. You’ll be giving them your social security number, your driver’s license number, your annual income, and your bank account information – so if you’re not comfortable sharing this type of personal information online, then this site isn’t for you!
When you make an initial request for a loan, you’ll be asked to submit a ‘posting.’ In this loan posting, borrowers are selling their needs. By having loan posting complete with a compelling story, a personal budget, and a picture, borrowers will find that loans are easy given by numerous lenders. If you have a bad credit score, however, there is a good chance you won’t be able to get a loan. And, even if you are approved to ask for a loan, your Prosper.com credit rating will be available for all lenders to see, and you may get lower lenders bidding on your loan because of it. The Prosper.com credit rating is as follows:
Prosper.com Grade Experian Credit Score
AA 760+
A 720-759
B 680-719
C 640-679
D 600-639
E 560-599
HR 520-559
While you’re numerical credit score is never disclosed, the borrower’s credit rating will be displayed on the loan posting. While this may be a disadvantage for many borrowers, it’s helpful for lenders to choose the best borrower with the lowest risk.
For Loaners
As with any peer-to-peer lending, the risk for a lender is very high. Because a lender can’t personally interview each loan applicant, there’s no way to really know how much a lender intends to repay the loan. While there hasn’t been numerous complaints, a lender can expect 5% of their loans to be late, or default. If this number is too high or risky for you, lending on Prosper.com isn’t for you.
Lenders must also have the total amount they’re willing to loan in the Prosper.com system before they can bid on a loan. Coupled with the fact that Prosper.com doesn’t offer any type of interest income for monies in their system, lenders can end up passing on a good loan. So, while you won’t get any interest on any monies in the Prosper.com system, it’s always a good idea to keep at least one loan amount in there, in case the ‘perfect’ borrower comes along.
If the risk is acceptable, lending on Prosper.com can be lucrative. Many Prosper.com lenders are very pleased with the return they’re getting with the service, and are happily loaning to several borrowers within the system.
While Prosper.com is a newer service, it’s a hit with both borrowers and lenders. High-risk peer-to-peer lending isn’t new, but it’s been made easier and easier-to-understand with an exemplary service like Prosper.com.
Recommendation of the Month:
Several individuals have had success with various programs and opportunities; however, The Federal Watch has recently endorsed Internet Multi-Millionaire Russell Brunson.
His realistic approach to making additional money online has changed the lives of thousands of people.
Russell delivers quality content and will even personally mentor you through the steps necessary to succeed in making money online.