I've been spending a good amount of time lately getting to know Prosper, which I discovered a couple months ago. Yes, I'm going slowly, but now I'm really starting to like what I see. Prosper is a person to person lending network. I understand the founder of eBay is involved, and it does look like eBay to an extent, in that lenders bid on the ability to lend money to individual borrowers.
The thing is, the lenders aren't banks or investment firms, the lenders are people like you and me. In fact I'm involved in Prosper as a lender.
Why would I lend to somebody that I don't know? Basically, so that I can get higher yields than the banks will give me. There's a little more risk, but Prosper makes it easy to diversify to the point that the extra risk isn't that risky.
Prosper does all the research on the borrowers for you by showing their credit profile, and ranks them by credit score. AA is best, HR (high risk) is worst. The interest someone will pay, or receive if they're a lender, depends on their credit rating.
Prosper also lets you see other items in a person's credit profile, for example the debt to income ratio. The higher the ratio, the more you want to avoid that loan, or on the borrower's side, the more you have to pay in interest to entice bids on you.
A typical Prosper loan is $50. If someone wants to borrow $5000, there then could be 100 lenders each lending $50.
How much yield is there if you're a lender? I just lent $50 to someone the other day, and am receiving around 14.5% interest. Compare that to a bank. The person had a good credit rating.
A full review of Prosper is in my external link below. To me, it's a way to further diversify my portfolio. More risky than a bank, much less risky than the stock market or real estate market. Do your own due diligence before lending.
And yes, you can also borrow money at Prosper as well, in fact you might be borrowing from me one day.
