Prosper is Back

http://blog.prosper.com/2009/07/13/welcome-back-lenders/

by bdr • 17 years ago

36 14 17 years ago

blog.prosper.com

gruseom2• 17 years ago

That is a formidable barrier to entry.

encoderer• 17 years ago

but lending club beat them to it... or am i misunderstanding?

gruseom2• 17 years ago

I was referring to SEC approval to do something unorthodox with securities online. I'm ignorant of the space, so it's quite possible someone beat them to it.

noodle3• 17 years ago

lending club works differently.

microtherion3• 17 years ago

Prosper indeed is technically neat in some aspects. However, default rates for most lenders are sky high: According to outside estimates, 9 of the top 10 investors on Prosper will end up with a negative ROI, despite lending at double digit interest rates: http://www.ericscc.com/tools/prosper-lender-list

Before investing a sizeable amount, consult external sites and/or observe a smallish portfolio for 6 months or so.

noodle3• 17 years ago

the issue there is that you're looking at people with huge lump sums who spread their money around as much as possible. if you just throw your money around equally at everyone, you'll probably not come out in the black.

if you invest in a more targetted, calculated way, you'll be more likely to come out with a good return. there are plenty of accounts with 10%+ estimated ROI on that list. take a look at how they invest, there are some trends.

disclaimer: i've not invested any money in prosper, but i was considering trying it out right before they shut their doors. i've done some homework on it.

microtherion3• 17 years ago

The top 10 I mentioned had a wide variability of strategies, and I can assure you that they all thought they had a plan.

If you only look at lenders with a sufficiently large (20 loans) and aged (365 days) portfolio to make an evaluation plausible, only 167 lenders of more than 19000 lenders in that category had an estimated ROI of >10%.

Of the 1161 lenders with more than $10K invested and a portfolio older than 365 days, exactly 3 had an estimated ROI of >10%.

The http://prospers.org discussion boards are full of guys who've done their homework. The test is how their loans fared, and generally they haven't fared well.

disclaimer, which I should have stated above: I've invested $1K a few years ago, and am more or less breaking even at the moment.

mmt• 17 years ago

The other important point to note is that the new/current Prosper has the agreements structured such that they, not the lenders, own the notes.

The original risks were that borrowers wouldn't pay and that Prosper wouldn't live up to their agreement (the effects of both of which are reflected in the graphs at http://fred93blog.blogspot.com/2009/08/prospercom-080109-lat...). Now a lender contends with a third risk, which is Prosper's own insolvency, a highly likely outcome, considering the lawsuits they face.

seldo• 17 years ago

Also in this space are LendingClub, who don't do auctions but have a similar model of letting people buy portions of other people's loans. They claim an effective APY of just under 10%; I've invested a (very small) sum with them as an experiment and so far am on track to hit that APY (after 2 months).

grandalf• 17 years ago

fantastic! Just signed up.

jakewolf• 17 years ago

I took out a small loan with prosper 3 years ago and it's definitely a quick and easy way to get cash if you have good credit.

Prosper is Back

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