Prosper.com is one of those peer to peer lenders that connects people that are looking for money with people that have money to lend. For years, Prosper functioned as an online auction website. It was like an eBay for loans. The company is based in California and has grown in size over the past few years. Prosper is a lender that I am very familiar with as I have personally used the company’s services and have years of experience with the company. So, is Prosper the right company for you?
Prosper Review
I first started using Prosper back in 2006 when the company was first launching its services. I had heard about Prosper via its online advertisements so I decided to give the company a try. Prosper was marketed as company where people could lend out money to borrowers looking to pay off credit cards, start a business, buy a home, or help with the bills. My experiment with Prosper was to lend out a small amount of money and see what type of returns that I could earn on my money.
Prosper lets you lend out money to one single person or a number of different people. You get to see the credit ranking of each borrower, the purpose for the loan, and the dollar amount sought. This helps you to determine whether or not you want to fund the loan. I decided to lend out $1,000 and break the loans up among a number of different people.Here is the loan breakdown that I chose:
$500 to individuals with good credit
$250 to individuals with average credit
$250 to individuals with below average credit
I chose this breakdown because I was concerned about the level of default of borrowers. I did not select any borrowers that were considered extremely high risk. Even the below average credit individuals were slightly below average credit. Prosper used a rating system that ran from AA, A, B, C, D, E, and HR AA credit ratings are the best and HR credit ratings are the worst. Making a loan to a person with an E or HR credit rating is like throwing your money away. The loans that I selected to bid on were to borrowers with credit ratings from AA credit to C credit.
I then proceeded to bid for the loans by entering the interest rate that I was prepared to bid. The bidding process involves entering an interest rate lower than other borrowers to win the bid. Borrowers always select the lenders with the lowest interest rates.
Here is the loan breakdown that I chose:
$500 to individuals with good credit
$250 to individuals with average credit
$250 to individuals with below average credit
I chose this breakdown because I was concerned about the level of default of borrowers. I did not select any borrowers that were considered extremely high risk. Even the below average credit individuals were slightly below average credit. Prosper used a rating system that ran from AA, A, B, C, D, E, and HR AA credit ratings are the best and HR credit ratings are the worst. Making a loan to a person with an E or HR credit rating is like throwing your money away. The loans that I selected to bid on were to borrowers with credit ratings from AA credit to C credit.
I then proceeded to bid for the loans by entering the interest rate that I was prepared to bid. The bidding process involves entering an interest rate lower than other borrowers to win the bid. Borrowers always select the lenders with the lowest interest rates.
