ProsperProsper.com was created to allow United States citizens to participate in peer-to-peer lending. The site was developed in an effort to allow individuals to connect with private lenders in an attempt to get loans in situations where a bank or financial institution might not be able to help. Those with poor credit have an advantage wherein they might be able to obtain a private loan at a much lower rate than a bank or a credit card company would be able to offer. When a member registers to use the site as a borrower, the site runs an Experian credit report in order to assign a site-specific credit rating. Lenders are able to profit by setting their own interest rates based on their own calculations, up to 29% or the state maximum. Like most user/buyer systems, those who borrow will be given feedback that other lenders will be able to see in the future. Borrowers who fail to make payments will be given low feedback. Lenders are also able to discuss their loans and ask borrowers questions before granting loans. Borrowers are able to present their own stories, or reasons for needing a loan - information that most banks and financial institutions do not care to know about. Critics agree that there are a number of pros and cons to the system Prosper.com has to offer. On the upside, investors can make over 10% on their investments. Lenders have the opportunity to help everyday individuals like themselves with their financial situations, business ventures, or property investments. On the other hand, even though Prosper.com runs credit checks there is still a chance that a borrower will present misleading information and that a lender will lose money. There are tons of Grade A (profitable) borrowers on the site, but there are also plenty of lenders who would like to deal with these borrowers. Competition is fierce and the only way to make money is to risk lending to those who have less than stellar financial histories. There are things you can do, as a lender, to limit the chances of participating in a loan that will default. Diversify your portfolio by lending to people from all credit score categories. If someone should happen to default on a loan, you will still recoup part of your money from the interest on the other loans. Individuals are encouraged to participate in "groups" which also tend to have higher credit scores because they tend to pay back their loans on time without default. Don't begin lending on Prosper.com without first visiting their forum message boards. You'll find a lot of great information on how the site works, including user experiences. After examining and testing hundreds of money-making opportunities and work at home programs, ONLY ONE brought in a paycheck that covered all my monthly expenses. Click here to go to this website. |