Prosper.com / Peer lending: Legit?

[amakhosidlo]

Anyone tried prosper.com as a lender? The rates are attractive, as is the option to screen out (some element of) risk.

Pretty attractive concept: I take my $$ out of the hands of (insert expletive) megabank, and lend it out to folks for stuff like home improvement, car repair, etc. Even the loans for folks with 700+ credit ratings are up around 10%. Minimum is like $100 per loan, so you can spread risk over a huge number of loans, and most are relatively short-term (3-5 yrs).

Really, really interested in trying this out, curious to hear about other people's experiences...

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[walli]

Prosper enabling dead beats everywhere.

Great concept just very poor execution, prosper has no stake in the loans so makes little effort to collect when they go bad.

I heard about prosper while reading the WSJ about three years ago. I thought is sounded like a good investment. High rate of return no correlation with the stock market.

I lent to mainly AA and A credit but due to the Prosper's lack of proper screening and lack of any effort to collect one third of these loans went into default almost immediately.

Prosper used to have a forum where lenders could discuss loaning money, but when the forum's users started to warn lenders about fraudulent posting by obvious crooks seeking loans and chronicling the non existent collection effort by prosper they shut down the forums.

They apparently also decided to shut down their Facebook page, " they didn't like the huge backlash that was going on on their Facebook page from people upset about the non-auction changes and in typical fashion, instead of having any real PR, they just destroy the community to try and hide the problems."
"I noted several critical and questioning posts from users in the past few weeks. I guess Prosper is taking some pages from the playbook of middle eastern governments, shutting down the means by which people can get to the "town square" to voice their concerns." -http://www.prospers.org/forum/facebook_fans_are_muzzled-t23183.0.html

The rates of return they quote on their web site now are pure fantasy, and in no way represent the actual negative ROI that their average investor receives.

Google the many off prosper lender forms to hear what is really going on.

http://blog.ericscc.com/ is one of the better sites with real unbiased prosper numbers.

http://www.prospers.org/wiki/Main_Page


I tried to get the highest ROI by minimizing losses by investing only in AA an A loans Prosper originally claimed I would have a 12% to 14% ROI. I invested $3700 in about 84 loans @18% average APR now almost three years latter 36 the loans are written off. I have collected about $3400 in interest and principal so a $300 loss. I still have 6 loans left with less than half a year of payments so if I don't have any more defaults and they keep paying on the of the loan, I may only loose $250.


"How nifty! Prosper sent me an email reminding me how I have a negative ROI.

That'll inspire me to bid again!

We've heard feedback from our lenders and want to provide you with clearer insights about your Prosper returns to date:

Purchase Period Total Dollars Invested* Number of Notes* Average Note Age* Annual Return**
2009-2010
$0.00 0 N/A N/A
2006-2008
$6,214.13 103 677 Days -0.27%
Overall
$6,214.13 103 677 Days -0.27%
Since our relaunch in 2009, Prosper has implemented changes that have reduced losses by 66%, helping lenders earn better returns than ever.

If you haven't seen it already, we encourage you to read our recent Risk and Performance Presentation to get a better understanding of the improvements we've made in the last two years to safeguard your investment.

Thank you again for being a member of the Prosper family - where it's always a great time to invest!"-http://www.prospers.org/forum/roi_email_from_prosper-t22275.0.html

 

[touchadream]

Anyone tried prosper.com as a lender? The rates are attractive, as is the option to screen out (some element of) risk.

Pretty attractive concept: I take my $$ out of the hands of (insert expletive) megabank, and lend it out to folks for stuff like home improvement, car repair, etc. Even the loans for folks with 700+ credit ratings are up around 10%. Minimum is like $100 per loan, so you can spread risk over a huge number of loans, and most are relatively short-term (3-5 yrs).

Really, really interested in trying this out, curious to hear about other people's experiences...

Once you have some substantial funds to invest, get yourself an 831(b) captive insurance company and you can BE the bank, a real bank, er, I mean insurance company, but guess what? they lend too. You can make loans to other doctors and take back personal guarantees, that's a better deal all around, plus huge tax advantages...good thinking on your part, but you need REAL execution of an idea like this. Meanwhile, look into other alternatives, do you know what Siemens or GE make on leasing equipment to hospitals? You can get into an equipment leasing fund? They are paying 7-8% now. Not bad and less default risk, although some is always there...It is a shame Prosper didn't work as intended. Great idea, but it lets you know how much there is to lending and the recourse process, so you know SOME of the default issues banks have. There is a reason law firms take offices in bank buildings. Banks need LOTS of legal work. Another great reason they are paying .000001% on your savings.

 

[odieoh]

Anyone tried prosper.com as a lender? The rates are attractive, as is the option to screen out (some element of) risk.

Pretty attractive concept: I take my $$ out of the hands of (insert expletive) megabank, and lend it out to folks for stuff like home improvement, car repair, etc. Even the loans for folks with 700+ credit ratings are up around 10%. Minimum is like $100 per loan, so you can spread risk over a huge number of loans, and most are relatively short-term (3-5 yrs).

Really, really interested in trying this out, curious to hear about other people's experiences...

I tried it a few years ago and had a similar experience as Walli. Fortunately I did it on a much smaller scale, I put in 300 dollars and did 6 50 dollar loans. Of those 6, 2 defaulted, one immediately and the other after making payments for 6 months or so. I'll probably end up losing a little bit of money overall. I also loaned to A or AA rated borrowers- the "safest" catergories.

Agree with Walli's suggestion to check out some of the non-prosper forums. Prosper is able to skew its numbers such that they make it look like people are making great returns. When you look at it objectively, it absolutely sucks and no one except a few very very lucky outliers is making any money doing it.

Incidentally, I also tried using prosper to borrow. I had one student loan that was about $9000 at 9%, which was a lot higher than all my other loans (~3%). So I wanted to try and "refinance" to lower the rate. It wasn't some huge thing but I was interested to see the process from the borrower side. My loan was only 50% funded, even though I was a AA rating. I think so many people had been burned by other AA ratings they weren't willing to give a lower interest rate, I think the lowest I would have ever gotten would have been 9-10%.