Prosper Lending

Prosper Update

2008-03-21T08:58:00.005-04:00

Well it was inevitable! Out of the 13 loans I currently have, two are in collections and the rest are current. I can't really complain as my average interest rate is now over 20%. I have managed to maintain this high return while adding some better credit loans into my mix. My net gain is $34.28. Of course, that will decrease if either or both of the loans in collection are written off.

Overall, I would have to say I am quite happy with the Prosper system and my experience. I will continue to post updates as my portfolio grows.

Eight loans to peers, no defaults

2008-01-06T13:00:00.001-05:00

I am very happy with these results so far. My average interest rate is 18.87%, and I am making twenty-three cents of interest per day. I have so far netted $20.73 from the loans I have made. No, it hasn't made me rich, but I really have just been doing this to see how and if it works. I will continue to invest and reinvest, and hope to make peer lending a valid source of second income.

Prosper makes it very simple to track earnings and results with a loan summary page (see above) and an account summary page (below). This way I can always see if my loans are current, what returns I am earning, etc.

They also continue to improve the site. For example, I recently noticed that if you are bidding on a loan, and your projected return is lower than you should be getting for the credit tier you are bidding on, they will warn you and make you confirm you are aware of that fact.

The projected return is calculated based on the interest rate, fees, and potential of default on your loan, and shown before you submit your bid. Pretty handy!

Prosper update

2007-11-09T12:06:00.000-05:00

I just wanted to post a quick update on my Prosper peer-to-peer lending status. I currently have a total of six loans outstanding, with an average interest rate of 19.48%. The principle amount of the loans is currently $373.29. So far, I haven't had anyone default on their loan, but it's really early in the game right now, so I don't expect that to continue indefinitely.

Bid On 4th Prosper Loan Won

2007-09-15T13:21:00.000-04:00

Well this makes four out of four loans that are being reviewed, so I can only assume that every loan has some sort of review process after the bidding ends and before it is funded. So my general feedback on the whole Prosper lending process is that everything seems to take a lot of time.

I am very pleased so far, though, because my average return is over 20%, and I'm three for three, having recieved the first payment on all three of my existing loans. That makes me feel like I didn't lend any money to complete deadbeats.

I'll continue to post updates as things progress, and if you have any specific questions, please feel free to leave me a comment and I'll be happy to reply to anything.

I Got Paid!

2007-08-30T10:45:00.000-04:00

Well I collected my first payment of $2.74 on an $80 loan, 99 cents of which is pure profit! That is certainly not a lot, but multiply that out over time and reinvetest the money, and I think I could make decent income after a bit. Sure beats making 4.25% in my savings account anyway. Right now, this is kind of a glorified hobby, but it really doesn't take up much time and how many hobbies do people have that actually MAKE money instead of COSTING money!

Prosper Borrowing Tips

2007-08-23T15:39:00.000-04:00

Well I've bid on many loans now, and I have noticed that most of them just do not end up getting 100% funded. It occurs to me that anyone wanting to borrow some money might benefit to know some of the things us borrowers look for when bidding on a loan.

Remember that in essence, you are competing with all the other people who want to borrow money, so you DO have to market yourself. Prosper will categorize you according to your credit, and beyond that, it's pretty much up to you.

First of all, if you end up being scored anything less than "D" credit, you may want to consider trying to repair your credit a bit before listing your request. Of course, that may be the purpose of your request, and if that's the case, I say "go for it!" You won't get a loan if you don't try.

Next you need to figure out how much you would like to borrow and what interest rate you are willing to pay. There is a calculator you can use to figure out what your payments will be. I recommend only borrowing what you really need, and what you can afford. I do not like to bid on anything more than $10,000 simply because on a three-year loan, the payment seems really big. I want the borrower to be willing and able to pay this loan for the long term.

Choose the highest interest rate that you are willing to pay. Remember, that if you get enough bids to have your loan funded, this rate will likely be bid down to a lower rate. If you choose a rate that is too low, no one will bid on it.

Do not do automatic funding. It may seem like the quickest way to get your money, but there is no chance that your rate will be bid down, and it makes you seem desperate, which is not attractive to lenders.

Last, and most important, BE HONEST! Describe why you are in your current financial situation, what you are going to use the money for, and why lenders should trust you with their money. Remember, I am deciding whether to lend you my hard earned cash! I am not just going to give it to anyone who's asking for it. Answer any questions asked of you, and if possible, get endorsements from friends. It always means something to me that a borrower has someone who will vouch for them.

Well I hope this helps, and if you are looking for more info on Prosper, or want to join, please use my link below. Also, please feel free to ask me questions!

Third loan funded

2007-08-09T08:31:00.000-04:00

Well my average rate is 20.33% now. I want to tell you that nothing ever seems to happen fast on Prosper. Once the bidding has ended and you are a winning bidder, Prosper says they will "occasionally" verify information from the borrower, which could take up to seven business days. Now I'm all for verifying information. If they tell me they make $80,000 a year and they only make $25,000, I have a big problem, but they don't really tell you this could happen until you win. Also, all three of my loans have had this review take place. One of them actually verified a day later, the most recent one took two or three days, and the other must have taken the full seven days. It just makes me wonder about that "occasional" part. Maybe I just got lucky and my three happened to be three of the "occasional" ones.

Well, my first payment is not due til August 27th, but I'm anxious to see how long it takes for me to get credit for it. I'll keep you posted!

More Prosper Lending Info

2007-08-08T09:34:00.000-04:00

There's not a lot new to report, just that I have another loan pending to be funded. This one's at 26.50%! My other loans have averaged 16.54%, still not shabby. The only thing is it was "automatically funded." This means that as soon as there are enough bids, the bidding ends and the loan is funded. I thought that was a good thing, but it seems the default rate for these types of loans is a lot higher. The theory is that these borrowers are either more desperate, not financially savvy, or just do not understand the Prosper borrowing process. At any rate, I'm hoping to not have to deal with any defaulted loans, but eventually I do expect it will happen. If it does, Prosper works with two collection agencies to collect the debt, for a fee, of course.

I have also discovered the joys of referring to Prosper. They will pay $25 if I refer a lender, and a percentage of the loan amount if I refer a borrower. They must become "active" which means as a lender they have a loan funded, or as a borrower, they make their first payment on a loan. So far I have referred 10 people who have signed up, so I'll see how many actually become active.

Of course, I have to put my own plug in here, so if you do want to become a Prosper borrower or lender, please click my link to get there!

I hope you find this information useful. Thanks for reading and I'll keep you updated.

Getting Started

2007-08-02T10:12:00.000-04:00

Ok so I'm always looking for ways to get out of "Corporate America". You know, the American dream...be your own boss. Now my day job is at the bank. I'm a personal banker...I do investments, loans, open checking accounts, credit cards...on and on. Of course I make alright money, but the bank makes even more. I drive 30 minutes each way five days a week to work 40 - 45 hours a week with two weeks of vacation. And "banker's hours" are not so great anymore! We're open til 6pm every weekday, and 2pm on Saturdays! That means most nights I get home around 7pm, unless I stop to run errands on the way home.

Anyway, I just wanted to fill in my background. I stumbled upon this ingenious idea...it's called "peer lending". is the only reputable site I could find for US lenders. They're calling it the "EBay of loans". Basically, people looking to borrow money for ANY reason list their request with details about why they need the money, what they're financial situation is, what interest rate they're willing to pay, etc. The site then posts all the requests along with some credit information, and lenders commence bidding on the requests. The great part is, you can lend as little as $50.

I joined July 13 and currently have won bids on two loans, at an average APR of 16.54%. The purpose of this blog is to try to give my feedback on the site and the process. So far my only concern is that it seems to take an unusually long time for funds to move from one place to the other. It takes several days to get money into the prosper account from my bank account, then once a bid is won, it can take several more days for the loan to fund as it goes through some sort of verification process. I haven't had any loan payments come due yet, so I'm not sure if those are credited quickly or not.

Having worked for banks for over ten years, it seems it shouldn't take as long as it does. An ACH can happen overnight, so I'm not sure what the holdup is. Anyway, please comment me if you have detailed questions about this process so far, and I'll be sure to update the blog periodically. Thanks for reading!