View Full Version : Prosper.com... Anyone ever heard of this site?

01-30-2007, 05:22 PM

Seems like an interesting concept. It's an eBay for personal lending. So say if I want to borrow $3000 (or whatever), I go post my request on this site. Then lenders bid for the right to lend me that money.

The cool part is that it allows for pooled resources.

So say 3 people bid to lend me the money.

Guy #1 bids $1000 @ 5%
Guy #2 bids $1500 @ 7%
Guy #3 bids $2000 @ 5.5%
Guy #4 bids $2000 @ 8%

Prosper then awards the loan to Guy #1 & #3. They take the money from Guy #1 & #3 electronically and pay me my $3000 loan the same way. Then they deduct my monthly payments and repay on schedule to Guy #1 & #3 based on the terms of the loan. Prosper then takes a closing fee like a broker.

01-30-2007, 05:27 PM
The converse of that situation seems interesting to me. It allows me to be the bank lender if I want.

So if I have $1000 to invest (lend), I can do it $50 per person to 200 people. I spread my risk like a bank, but I've cut out the middle man, and I'm getting 5-20% return (based on the risk of the loans I make) rather than 1% in a savings account or whatever.

It's an amazing idea that seems enable the economies of scale that the major banks have while allowing someone like me to get involved in the process and lowering the overhead along the way.

01-30-2007, 05:29 PM
Hey jAZ.... can I borrow some money?

01-30-2007, 05:32 PM
I'm going to ask for 25000 for porn accounts.

01-30-2007, 06:13 PM
What if they don't pay you back?

01-30-2007, 06:14 PM
What if they don't pay you back?


01-30-2007, 06:33 PM
Very interesting... thanks for posting it!

What if they don't pay you back?
looks like they send it to a collection agency if they're a month late on payment. kinda risky but might be worth it for 20% return

Simply Red
01-30-2007, 06:34 PM

Simply Red
01-30-2007, 06:35 PM
kidding of course.

thanks for the info...

01-30-2007, 06:37 PM
Will this make me a millionaire?

01-30-2007, 06:37 PM
So they have your name, address, SS# and account numbers.

I guess the paperwork comes from Nigeria to sign?

01-30-2007, 06:38 PM
Will this make me a millionaire?

Only if you own the site!

01-30-2007, 07:29 PM
What if they don't pay you back?


Late Payments and Defaults

What should I do if a borrower is late on a monthly payment?

Don't panic just yet. Sometimes people are just late. Prosper sends frequent emails to overdue borrowers and their group leaders (if they are members of a group), prompting them to pay their monthly payment as soon as possible.

Once the borrower is more than 15 days late, the borrower will be charged a late fee, which depends on the state lending limits in the borrower's state of residence. The late fee is divided up pro-rata among the borrower's lenders.

Once the loan is one month past due, it is turned over to a collection agency to pursue collection from the borrower. If the collection agency cannot collect payment from the borrower after a reasonable period of time (within 3 months), the loan will be considered uncollectable, marked as "Defaulted", and sold to a debt buyer. The borrower will not be able to borrow ever again from Prosper, and since we report delinquencies to credit reporting agencies, this default will adversely affect their credit report. Learn more about default sales and debt buyers.

Can I contact the delinquent borrower directly myself?

You should not contact delinquent borrowers directly. Prosper has a detailed delinquency schedule for borrowers, and any additional contact you have with a borrower may expose you to civil or criminal penalties for unlicensed debt collection. The language and tone you use when collecting a debt matter are important in the eyes of the law so what you might consider reasonable may in fact be illegal. If you were to accidently break the law you'd be putting yourself, your fellow lenders, and Prosper at risk of litigation.

Can I collect on late payments myself?

Under no circumstances should you attempt collection on a late payment yourself. Compliance with all state and federal laws while attempting to collect a delinquent loan is not trivial. When necessary, Prosper ensures all collection activity is performed by licensed and professional collection agencies. Lenders who undertake debt collection (even if they are a debt collector by trade) are in violation of Prosper legal agreements and will undermine the collection agency's ability to do their job. Moreover, in doing so you run the real risk of creating a legal liability for yourself. Learn about collection agencies

How can I prevent defaults?

You can't pick your relatives, and you can't prevent defaults. You can, however, know that you are assuming some risk when you make a loan, and take steps to reduce that risk. Here are a few techniques for reducing your risk when lending:

Lend to lower-risk borrowers: If you're worried about defaults, lend to borrowers who have higher credit grades (AA, A, B) and less than 20% debt-to-income ratios.

Find borrowers who are members of groups: Borrowers in groups may have a lower risk of default because of a sense of loyalty toward other members of the group and/or the group leader. This sense of loyalty and shared reputation should encourage a borrower to make monthly payments on time.

Make small loans to many borrowers: One of the best ways to lower your risk (no matter who you're lending to), is to lend smaller amounts to many borrowers. The more loans you make, the less risk you'll take compared to lending to just one or a few. And the best part is that it doesn't cost a cent more to lend to a lot of borrowers than to lend to just one. In fact, there's even a tool you can use, called a standing order, that will place bids for you. Learn more about standing orders.

Understand the risk profile of your borrowers: Use the marketplace performance page to see performance, delinquency, and default data on Prosper loans. Using this data, you can gain a better understanding of the dynamics of the Prosper marketplace, and use that knowledge to minimize the risk taken on borrowers.

01-30-2007, 07:31 PM
im gonna borrow money to create an exact copy of this website. thus becoming its main competitor and making tons of cash