The Website can be found here http://www.prosper.com
The Wiki can be found here http://en.wikipedia.org/wiki/Prosper.com
Wallstreet Journal interview here http://online.wsj.com/article/SB120525138644627455.html
So what is Prosper ?
Prosper opened to the public on February 5, 2006. They are an online auction website where individuals can buy loans and request to borrow money. Borrowers set the maximum interest rate they wish to pay, and loan buyers, called "lenders," bid on specific loans by committing a portion of the principal and setting the minimum interest rate they wish to receive on a particular loan. Prosper manages the reverse dutch auction, assembling bids with the lowest interest rates in order to fund the loan.
Prosper verifies selected borrowers' identity and personal data before funding loansand manages loan repayment. These unsecured loans are fully amortized over three years, with no pre-payment penalty. Prosper generates revenue by collecting a one-time fee on funded loans from borrowers, and assessing an annual loan servicing fee to loan buyers. The idea for the service is derived from group banking concepts, such as rotating savings and credit associations.
My 2 cents
Ok So word on the street is, this is another site thats picking up popularity FAST. I actually found this site while doing intel screening on QASSIA .
The concept is pretty cool, ordinary people can be lenders and the same token ordinary people can be borrowers that don't have to go through a bank.
Whats the benefit on both sides? For the Borrowers its simple they can get lower rates by getting the money from consumers. An example I read was a person was trying to get a motorcycle loan for 15,000 and was getting qualified at 26% rate with banks, he came on to prosper got a 15,000 loan for 15%. Not bad 11% rate reduction.
Also when doing blog searches on google for prosper.com blogs, I came across a story of a lady going through some financial hardship and was trying to take out a loan for some medical bills for her pets. She got denied at the banks but got the money through prosper.
It puts a more personal transaction in the process as well. As a lender you can ask the borrower questions, what are they going to do with the money, why they messed up their credit, etc etc...puts you in the position of why are you gonna lend out this money. the borrower who had pet medical bills wrote a blog on how friendly the consumer lenders were for her and was actually rooting for her to help her pets. I think thats pretty cool actually, hearing stories like that and when you become a personal lender you could be helping out a lot of distressed borrowers who are in need of a financial pick up, the vision is endless like helping a borrower get back on thier feet, go to school etc....The other side of the coin is too of course with any business like this online could be scams, watch out.
How the lending system works
You can invest as much as you want but your risk is only capped to $50 per borrower. So for instance a person wants a 10k loan, you have 2.5k invested in prosper, you bid on the borrowers loan to have an investment in thier 10k loan, if you win the bid you only invest $50 to spread out the risk and minimize loss.
Prosper rates prospective borrowers for creditworthiness by assigning a "credit grade" based on the borrower's Experian's Score. Prosper credit grades are (starting with the highest) AA, A, B, C, D, E, and HR (high risk). Lenders considering a bid on the borrower's loan listing have access to the borrower's credit grade, along with summary credit data from the prospective borrower's credit history, including number of current delinquencies, amount currently delinquent, delinquencies in the past 7 years, and other data.
Equivalent credit scores for Prosper credit grades are:
| Grade: | AA | A | B | C | D | E | HR |
| Score: | 760+ | 720-759 | 680-719 | 640-679 | 600-639 | 560-599 | 520-559 |
In addition to credit data, lenders also see the borrower's group membership, if any, friendships with other Prosper members, endorsement from those friends, past listings and prior Prosper loans. Both borrowers and lenders are anonymous (identified only by screen names) to protect their privacy.
Am I going to do this?
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