Prosper.com - first take

Earlier I posted on Prosper.com. I promised then to provide an update. The four images in this post are from my own activity on the site and are deliberately obscured. For full illustrated tutorials, view the Prosper.com website. Enrolling in Prosper.com is free. One does not need to transfer $$ into Prosper.com to be enrolled.

Prosper.com is a peer-to-peer lending. The loans are amortized over three years with no prepayment penalty. They are not secured loans!

Suggestions and warnings:

  1. Not for one's primary savings plan!
  2. No built in safety (FDIC insured) like one's local bank!
  3. One could lose money on Prosper.com!
  4. I am not promoting, inviting, or recommending Prosper.com!
  5. This blog entry is my own personal experience. I have not yet made any money on Prosper.com (but I expect to!)

Transfering money from one's bank is EZ. Cannot loan $$ until transfer takes place.

One bids on either an entire loan or a fraction of a loan. The final loan rate to the borrower is an aggregate of the fractional parts.

The system reports on loans won (with the rate) and loans outbid!

Multiple reporting options are available. This one shows loans I've won.

My experience and observations:

  1. I've invested $ 200. in Prosper.com. Ultimately I would like to invest $ 1,000 but I do not intend to invest more until I've actually made some money! It is "small potatoes" in my investing strategy: after my 401K and other savings and investments.
  2. I hope to have a return of at least 10%.
  3. My first loan bid was for the full $ 200. I was not in the low bidder list (low interest rate). After I lost this loan, I purposed to keep my maximum investment in any one loan at $ 50 (the Prosper.com minimum). Thus ultimately I invested in four loans.
  4. I invested (some from my heart) in:

    1. A soldier who needs to have his engine replaced.
    2. A divorced woman recovering from bankruptcy and consolidating her debt.
    3. A man in Oregon refinancing his Toyota Camry.
    4. Someone with medical bills and doing some condominium repairs.

  5. The aggregate loan rate for the 4 micro-loans is 14.71%
  6. Keep in mind, as of yet, no payments have been made. None of the above loans are secured. If anyone defaults, I lose $ 50! I probably will not have a success story for a number of months.
  7. This blog posting focuses on the lending side of Prosper.com. I view Prosper.com as a borrower's last resort.
  8. I'm not a financial advisor, but I recommend that every family have a safety savings plan and an emergency fund of at least one month's income.
  9. Your local bank, or an Internet bank (see links on right column) are good places for savings accounts!
  10. Many of the borrowers on Prosper.com have a very checkered credit history. I urge everyone to read your credit report annually (see link list on this blog site!) and to maintain good credit! Good credit is one's friend. Bad credit history is one's enemy!

As always, I invite comments and views.

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