Ask These Guys

In short, individual lenders pool their money together and make loans to borrowers.

Prosper.com is leading the way in peer-to-peer lending sites.. It’s the Ebay of Lending.
Does this sound a little like a bank?. Well, Prosper is a bank. But with a big difference.

Prosper puts the lender (investor) and the borrower (customer) in direct contact. The borrower will post a loan and set the maximum interest rate they are willing to pay. Lenders look at all the available loans and see each borrower’s debt to income and risk level based on a credit rating assigned by Prosper. If that information is not enough for them they can e-mail the borrower to get more information.

What is the catch? Well, there are some small fees for using Prosper. On the borrower’s side there is a flat 1% fee on all loans. On the lender’s side there is a fee of one-half percent on an annualized bases.

The borrower may get their money in as little as 10 days and if you’re just shopping for a better rate why not just set that as your maximum rate and see what real people think your loan is worth?

The only drawbacks may be that all loans are set for 3 year terms only and must not be more than $25,000.00. You may not be able to buy a house but if you have a credit card at 10% or more than you might just find out that Prosper can beat that rate. AA, A, and B rated loans are as low as 6% but each loan is unique and rates vary.

On the other hand if you have a poor credit score, this might be the only place you can get a loan.

The lender is taking all the risk of the loan. It is possible that you will lose your money when you invest in only one loan. It is suggested that you make a lot of small loans to help lower your risk on your total loan portfolio. You might also want to stick with higher graded AA, A, and B rated borrowers.

These are the grades that a regular bank likes to lend to. Payments to you are made as they are cleared which for the most part is monthly. Where are you going to get 6-15% on your money and only need to put up $50.00?

What’s really interesting about Prosper is that borrowers must join borrowing Groups and when a borrower is late on their loans, their group is notified.

Not only that Prosper works just like any credit card.. If you default on your loan it goes into the hands of a collection agency.. So not only will members of your group be contacting you, but so will a collection agent.

You can learn more and join the Got-Zip Prosper Group by Clicking Here.

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Bradley McGaughey, libertarian web-letter owner of Affiliate Fever.