You Can Prosper at Prosper.com
Written: Dec 25 '07
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Many of us look for a way to invest our money and gain the best possible returns on our investment. But what if you were able to invest your money, gain a decent return on your investment and help out someone in need of financial assistance all at the same time. You might think that this would be a great way to see both parties prosper, and you would be correct.
Prosper.com is a microfinance website in which you can both lend and borrow money free of any banking institutions and/or credit agencies. Instead, the individual becomes the bank or the borrower and the ability to both lend and borrow money rests on the intrinsic good of those in the entire Prosper community. Lending through Prosper.com is for Unites States residents only. Prosper has been reported in Business Week and Forbes and has been shown on CBS News.
As an individual account member, you can select to become a lender, a borrower or both.
Lending and Borrowing
Lending with Prosper is a great way to invest your money in people, businesses or ideas and earn a set interest rate on your investment. The minimum amount to lend is fifty dollars per listing and you bid on what interest rate you would be willing to lend to the borrowers seeking assistance.
People interested in borrowing money through Prosper have to list the amount that they are seeking to borrow, their debt to income ratio, a brief narrative about the money they are in need of and their plans for using it and often times something about themselves. Each borrower also has their FICO credit score generated into a letter score, therefore you can tell the risk associated with each loan based upon the credit score that the intended borrower has.
Each borrower, based upon their credit score, then seeks lenders (individuals like you and I) to bid on their listing. The bidding consists of how much you are willing to loan and the interest rate that you are willing to lend at. The bidding process of course takes as long as is needed to fulfill the total amount of the requested loan, so smaller loans tend to close out more quickly.
There is of course some risk associated with the lending process through Prosper, however should you narrow down who you are willing to lend to based upon credit scores and debt to income ratio you become a much wiser investor. Borrowers, should they then default on loan for one reason or another, are then saddled with the collection agency that each lender assigns to their account and all borrowers are subject to credit reporting agencies. The benefit of Prosper is that because you are only investing a minimum of fifty dollars in a loan lets say for two thousand dollars the risk is then shared and spread amongst a great many lenders.
The listings of borrowers are as varied as you could possibly imagine. Some borrowers are looking for loans to pay off high interest credit cards while other lenders might be looking for a loan to expand a business that they own. For each borrower listing, as a lender you are able to ask questions of the borrower should you have unanswered questions about specifics of the loan details. Borrowers also have the opportunity to have friends or business associates post endorsements of the borrower in a hope to show favor amongst the lenders.
There are several repeat borrowers on Prosper which is a bonus since as a lender you have access to information about how their last loan was handled. Should a borrower have a positive track record on Prosper for past loans certainly it shows that the risk of lending to them is greatly diminished.
Lenders to have to input social security information since interest that you earn through Prosper is reported for tax purposes.
The Sign Up Process
The sign up process for Prosper was quite simple. There is a need for Prosper to verify the banking account information that you will have linked to the account, therefore, there is a few day turn around in completely setting up the account. Once you establish the account and input the checking or savings account information that will be associated with your borrower or lender account, Prosper makes a small withdrawal and deposit into your checking or savings account. You then log into your Prosper account and input the values of each and your account is then confirmed.
Once your checking or savings account is linked, you are then on your way to lending and/or borrowing. For lenders, the next step is to send some money from your checking or savings account to your Prosper account. Once the money has been transferred into your Prosper account, the lending can begin..
Added Incentives of Prosper
An added benefit to Prosper is that current members are able to earn additional cash by referring friends to sign up for a Prosper account. If you refer a new lender to Prosper, your account is credited with a $25 credit and if you refer a new borrower to Prosper, your account is credited with a $35 credit.
If you are interested in signing up for an account, please either see my Epinions member home page for a link to sign up or send me an email and I will send you a referral email. If you sign up through me, you also are given an account bonus of $25 as a lender. This $25 can be used toward your first loan to earn some additional money.
Fees
There are fees associated with borrowing money, however, they are much more reasonable than banking institutions or credit card agencies. The nice thing is that there are no pre-payment penalties should a borrower wish to pay off their loan early and the interest rate on the loan is fixed and not subject to any changes in the market.
Overall Impression
There is probably no better feeling in the world than helping out someone else. But having more money in your bank accounts also adds a nice feeling of accomplishment, as well. Prosper.com is the best of both worlds. The website serves a great service in the area of microfinancing individuals and businesses that need a loan and as a lender you are able to earn a good return on your investment both in terms of the interest that you capitalize but also in the notion that you are helping someone out. As a borrower, rather than making the conglomerates more wealthy, by seeking individual lenders as your lender of choice you are ensuring the fiscal advances of individual members of the Prosper community.
The use of Prosper is highly user friendly and truly walks you through the process. Though certainly investing through Prosper is not as safe an investment as perhaps a traditional savings account, the ability to earn a far more significant return on your money is perhaps the best reason to join. For as little as $50 you can get your lending account up and running and earning a return on your investment. Sounds like a great way to spend your Epinions year end bonus, doesn't it?
Recommended:
Yes
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