Any personal expirience next to prosper.com? i have an extra 10k, im thinkin in the region of becoming

i have an extra 10k, im thinkin in the region of becoming a lender through prosper.comany advice?

Answers: Copied from:
http://www.finance-weblog.com/50226711/w...

It's really an exciting perception. Unfortunately, it will fail.

Here's why:

1. Scammers - The Internet provides excellent anonymity. While Prosper does do credit checks of those seeking loans and puts a credit rating for them right on the site, that doesn't stop those looking for money from creating complex scenarios as to why their credit is so unpromising (job loss, hospital bills, etc.) and why you should take a luck on lending to them. Sure, some populace get into money trouble because of errand loss and unexpected hospital bills, but others acquire into money trouble because they gamble, drink, or newly plain like to shop and are smiling to find a sucker who will feed the craving.

And you know there are already teen hackers within the Ukraine who are looking for ways to use the identities they stole this morning to nab some money from gullible Americans.

Be softhearted and you could see your money turn bye-bye.

2. People with upright credit don't need it, culture with impossible credit have nought to lose. Look on Prosper and you will see that many of these loans are going for interest rates of 15% and more. The singular people getting clothed rates are those who have well-mannered credit, and there aren't nearly as masses of them.

Why? Because people beside good credit can procure comparable or cheaper rates with a credit card, home equity loan, or small business loan if requirement be. They don't need this service, although a few may try it out to see what they can achieve.

If you have unpromising credit, however, why not use Prosper? You've got zilch to lose, because your credit's already shot and you might be able to grasp some money at a better rate than the payday loan lender is giving.

If you're a lender on Prosper, the promise of loaning your money out at 17% sounds great, until the loans start defaulting. Prosper's in its honeymoon time now, but when those high-interest loans come due, you'll see why the lendees own the credit ratings they do.

Which brings me to my next point:

3. Lenders will donate after getting burned or getting bored. Because the number of decent credit customers will be low, Prosper lenders will any tire of the site because their only potential lendees enjoy horrible credit, or they will start making riskier loans in survey of higher returns, and will set out after getting burned one too many times.

It's severely tempting to lend at the rates you see on Prosper, especially when the stock market's unstable. But together companies, made up of smart people beside financial expertise, have be set up to offer loans to doomed to failure credit customers, and many of those companies hold folded after too many default.

Anyone remember NextCard, the Internet credit card of a few years back? They offered confident credit and the government have to shut them down when they lost millions and millions of dollars. Other credit card companies serving the "subprime" customer have see humongous losses, especially in financial downturns.

Maybe Prosper's lenders are smarter than these companies and will loan to only the right relatives. But how likely does it seem to be that a nation of lenders doling out money from their computers are going to have the expertise to outwit bank and other lending institutions?

Lenders who stick around are going to carry burned and the downward spiral will be inevitable.

4. It's not an eBay of loans. BusinessWeek used the "eBay of loans?" headline to give a immediate take on what Prosper could be. But where on earth eBay uses its feedback feature to maintain people honest (although logically not everyone is), Prosper can't really do the same. Many culture on eBay are repeat customers--they want to play fair so they can maintain playing. The only family likely to be repeat customers of Prosper are going to be those beside financial trouble. Really, how many times do most of us have need of a $1000 loan if we have control of our finances?

So nearby is no real incentive to income these Prosper loans back, especially if your credit journal is already in shambles, because you don't call for to worry in the order of how you'll look to Prosper lenders later on.

You are better past its sell-by date investing in the stock marketplace, CDs or open a large interest savings/money market story.

Ya what he said, I wouldnt do it!

Hello. I like the perception of the site, and I can see why it is appealing to debtors, but in one and the same thought as the other comments, why is a person beside high income and credit going to use this site. They bring back calls, emails, parcels etc offering home equity loans, low rate balcance transfers, etc every day. That is the maco monetary side. I could write more about credit scoring models, approval rates, non-score related decline reason, etc, but those are related to getting the right approvals. On Prosper, what ever the default rate is, it is.

OK set that aside as the concept can work, it is in recent times a matter of finding a set off between the rate lenders demand, the rate customers will wages, the default rate, and the glibness of use for both parties.

My quiz for lenders is that they may not fully calculate to impact and arbitrariness of a total loss. And that is mundane, as given any type of risk situation, the tendancy is to underestimate the total risk. Just look at the news, Ice Storm surrounded by Oklahoma, thousands of people get in their cars after human being warned to stay home, consequently ended up surrounded by trouble.

So if you lent 2k to five people, are you prepared for the prospect that all five non-attendance and you lose 10k? Or even if 1 defaults you lose 2k.

The other approach is simply shopping around, freshly like buying gas or computer. If a big mutual fund company (I in recent times looked at the web site) have two high verbs bond funds (FAGIX) that have given returns of 10% and 13% over the later 1 year and 10 years, would that be a better option?
Good luck.