Prosper.com

Prosper.com is a financial website that connects private investors with individual loan seekers in the first US based peer-to-peer lending service. The allure of this type of lending system is that borrowers with poor credit scores can obtain loans at much lower interest rates than they could get from banks or mainstream lenders.

Conversely, lenders are presented with an opportunity to earn substantial returns on their loaned funds. As a lender Prosper.com allows you to set your own interest rates based on your calculation of a risk/return ratio (Max 29% or State Max). To facilitate this process each borrower is given a credit grade based on their Experian credit report.

In addition, Prosper provides a borrower feedback system much like in eBay, so for instance a borrower that defaults on a loan will have a poor score. You can also engage the borrower in a Q&A to find out their reasons for needing the loan and their plans upon receiving it. This helps lenders get an overall picture of the amount of risk they're dealing with.

Overall, there are pros and cons to the Prosper.com lending system. The pros are that investors can potentially get over 10% on their investments while helping everyday people start businesses, flip properties, or resolve debts.

The downside is that despite credit checks the system has some potential for fraud, abuse, and loss of capital. Furthermore, there's such a high demand for grade A borrowers that lender competition forces their rates below profitable margins. This pushes investors to seek profits from less secure borrowers.

However, there are methods for greatly limiting your risks when lending at Prosper.com. One strategy that limits risk is diversification, if you spread your loans out then even if one happens to be late or defaults you can recoup your losses from better loans. Also, you can lend to borrower groups which tend to have much higher scores and great payback histories.

If you're interested in becoming a lender at Prosper.com I would recommend spending some time in the lender's forum first. You can learn a great deal from other peoples' trials and errors.

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Customer Reviews for 'Prosper.com'

Comments to date: 3. Page 1 of 1. Average Rating:

Tom Brown Lynchburg, VA	12:19pm on Monday, August 31st, 2009
I reviewed Prosper.com because I was considering becoming a lender. It boasts "transparency" but makes it nearly impossible to uncover the fees they charge to lenders. I finally found the info somewhere around page 54 of the prospectus. I wanted to find out if there were any other fees so I went to the "contact us" link TO SEND MY QUESTION IN AN EMAIL. They won't let you send an email unless you're a member, but they don;t disclose enough info to decide if I want to be a member. Catch-22! This hypocrisy about transparency and the building of barriers to prevent effective communication set the warning bells ringing, and I won't do any business with Prosper.com
Melodi Maine	1:10pm on Saturday, October 18th, 2008
I have gone through prosper if it wasn't for that site i would have been on the streets and without a job. They granted me a 4000 loan and it comes directly out of my account so i don't have to worry about making payments on time and it counts toward my credit score. Thanks prosper.
Tom New York	8:11pm on Tuesday, April 1st, 2008
Don't bother borrowing with Prosper unless you have perfect or near perfect credit. All the lenders that would lend to "less than perfect credit" individuals are gone because of the fraud and the number of lenders is decreasing. If you are lender, be careful because even the A and B credit individuals are defaulting on their loans.