Risky New Investment Venue

[scrubradio]

One issue with this strategy is the shortage of good credit worthy borrowers. The rate will probably be bid down by competing lenders to a rate that doesn't justify the trouble and the risk.

Yes that could be a problem. When prosper finally sets up the accounts
to where the lender can earn a decent interest rate on money just sitting
in the account it would be less of a problem though. My money wouldn't
go out in a loan unless I could recieve a high enough rate to satisfy my
risk.

 

[Martha]

ditto. i checked this out a while ago and concluded that the return did not sufficiently compensate for the (perceived) risk ... and i think the risk is considerable. the idea of skipping the middle-man (and associated fee) is attractive, but, as with many things, the middle-man serves a purpose and (at least partially) earns that fee. if this turns out to be a good idea in practice, i can join-in sometime in the future ... i don't want to be on the leading edge of this one.

And you are not skipping the middleman. The middleman is Prosper, who is making pretty darn good fees. It gets a 1% origination fee from the borrower when the loan is made. It takes a .5% to 1% servicing fee. When you deposit money with Prosper to lend in the future, you don't get interest on that money.

 

[FinanceDude]

And you are not skipping the middleman. The middleman is Prosper, who is making pretty darn good fees. It gets a 1% origination fee from the borrower when the loan is made. It takes a .5% to 1% servicing fee. When you deposit money with Prosper to lend in the future, you don't get interest on that money.

More reasons to pass.............TINSTAAFL (There Is No Such Thing As A Free Lunch)

 

[d]

The middleman is Prosper

true! but one who takes none (?) of the risk

 

[NinjaPigeon]

I wouldn't touch prosper with Nords' money! Well, maybe I would, but not with mine

Personally, while the lure of 20% is great, the risk with this site is just too high right now. And 20% ROI on only 3% of my portfolio (modest as it may be) just isn't worth my time with risks like that.

 

[rogersteciak]

Using standing orders one can filter out all the bs listings and lend money to the semi secure individuals. A standing order can be set up to bid only on listings where the borrower has a clean credit history that is 5 years old or older with a reasonable DTI and low ammount of inquiries.

Of course they can be tweeked even more to tighten the criteria in anyway the lender wants.

I only use standing orders that have tight search criteria to find the appropriate listings to bid on so that my loan portfolio is created with robotic discipline. I have to keep my emotions out of the lending process.

 

[chinaco]

If these people cannot get the loan through conventional means... why would I underwrite the loan. Sounds like a good way to lose money. High risk loans with little or no collateral. Plus how am I going to check if they are credit worthy. Plus the paper is not liquid.

My take... If you want fixed debt in your portfolio... buy bonds or mortgage backed securities...

 

[newyorklady]

i agree with chinaco's logic. if the bank won't lend the money should i be the sucker who does

 

[scrubradio]

After having been there for 9 months investing, I have to say it is a very
scary proposition indeed. Thinking that everyone applying for a loan at
prosper cannot get a loan from a bank is wrong though. I have been
getting a 19% return on investment without any defaults at this point and
am very happy with that. I plan to continue to grow my portfolio as long
as that continues

 

[CybrMike]

Yes I have been doing it for about a year and have been getting 20+% even with the 2 defaults. I have about $2500 invested.