P2P Lending/Borrowing on Prosper.com

I am a huge fan of Prosper.com. Prosper is a web based platform for people to lend money to other people. There are currently over 740,000 members with $153 million in funded loans. Borrowers are given credit grades ranging from AA to HR (high risk) based on their credit scores. Prosper runs a potential borrowers credit and pulls info from it to post on the borrowers listing. For example: now delinquent, amount delinquent, delinquencies in last 7 years, public records last 12 monts/10 years, inquiries last 6 months, first credit line, current/open credit lines, total credit lines, revolving credit balance, bankcard utilization, employment status, length of status, income range, etc.

Lenders review this information and determine if this loan is too risky to bid on, or they decide this is a very low risk loan and bid on it. The minimum bid amount is $50. If this borrower was looking to borrow $2000, lenders would place bids on the listing until the full $2000 is funded with bids. Generally if the listing is a very low risk, it will get fully funded. All loans are 3 year at a fixed percentage rate. Borrowers can expect to pay anywhere from 7.75% – 35.00% depending on their credit grade. So what else does this mean? Lenders can expect to make anywhere from 7.75% – 35.00% interest!

I have been a lender for a little over a year with $2,359 currently loaned out making an average of 12.94%. I have been fortunante to never have a late payment or delinquent loan. There is a great site that allows you to view the performance of lenders called Lending Stats. Feel free to check out my portfolio for djmike805.

*Stats are current as of June 22, 2008