Prosper.com is a community of people on the internet that give and receive loans to each other. It is something called peer-to-peer lending and yes, it is legal. I am a lender on Prosper.
How it works is you apply, just like any loan, so you fill out an online application and go through a credit check (through Experian). One thing you do which is different if you need to write out your reason for the loan, and you should explain why you want it and how you lan to pay it back. the reason is that the people lending money on prosper aren't bankers. We are retirees, school teachers, sailors, college students, soldiers, nurses, and anything else you can think of.
That means we are not as set on debt ratios and credit as typical bankers are. As lenders we consider those things, but we will also give loans if we think it can make a difference in someone's life.
You submit your loan and prosper lenders (about 7000 of us, review it and decide if we want to help fund it. Most lenders on prosper only will put $50-$200 of each loan, so it ends up that several score or several hundred people will share giving the loan.
It is not perfect, the process can be a bit long (14-30 days from the time you register to the time you receive the loan) and you can only get 3yr unsecured loans. And if you have terrible credit, no job and no way to pay off the loan, you still won't have much luck at prosper (we stretch things but not THAT much)
But it is a good option, especially if you want to avoid bankers, or if you situation is unique that lenders don't understand.
Prosper.com is completely legitimate; it has cleared all regulatory hurdles in federal/state jurisdictions and has been in operation for years now. It was founded by successful Silicon Valley executives, with backing from venture capitalists. There is a decent likelihood of an IPO in the future. It is a completely innovative way of opening up the borrowing/lending supply/demand equation to the general public.
Why join as a borrower?
Generally, for any given credit rating, if you have a reasonable explanation for your current borrowing need and can show likelihood of recovery (i.e. recent college grad that incurred some credit card debt, recovering from a costly illness, temporarily laid off and now employed, etc.), you can borrow at rates significantly lower than you're likely paying a credit card company. This is because lenders will seek to bid down loan rates based on their assessment of risk and the middleman is essentially removed (the .5% Prosper fee is significantly less than the overhead/profit margin for credit card companies, who also have to account for fraud and defaults). Why would you pay 25-30% to a credit card company when you can pay 10-15% to Prosper community lenders? It also acts as a great personal finance tool, consolidating several loans into one, which makes it easier to manage your finances.
Why join as a lender?
Prosper.com has been a steady provider of above market returns (roughly 8-12% range), which are non-correlated with the major US stock market indices. This is an incredible mix which is difficult to duplicate by other means in the stock market. By spreading your loans across several borrowers, researching the details of each loan, and relying on some common best practices, you can asymptotically approach or exceed the aggregate return of the listed averages on the site for given credit grades, which can range from 8-12%, depending on the grade.
Comments
They charge a fee, i believe it's 1 %.
And ive heard very good reviews from them
Prosper.com is a community of people on the internet that give and receive loans to each other. It is something called peer-to-peer lending and yes, it is legal. I am a lender on Prosper.
How it works is you apply, just like any loan, so you fill out an online application and go through a credit check (through Experian). One thing you do which is different if you need to write out your reason for the loan, and you should explain why you want it and how you lan to pay it back. the reason is that the people lending money on prosper aren't bankers. We are retirees, school teachers, sailors, college students, soldiers, nurses, and anything else you can think of.
That means we are not as set on debt ratios and credit as typical bankers are. As lenders we consider those things, but we will also give loans if we think it can make a difference in someone's life.
You submit your loan and prosper lenders (about 7000 of us, review it and decide if we want to help fund it. Most lenders on prosper only will put $50-$200 of each loan, so it ends up that several score or several hundred people will share giving the loan.
It is not perfect, the process can be a bit long (14-30 days from the time you register to the time you receive the loan) and you can only get 3yr unsecured loans. And if you have terrible credit, no job and no way to pay off the loan, you still won't have much luck at prosper (we stretch things but not THAT much)
But it is a good option, especially if you want to avoid bankers, or if you situation is unique that lenders don't understand.
Hope this helps
Good Luck
Prosper.com is completely legitimate; it has cleared all regulatory hurdles in federal/state jurisdictions and has been in operation for years now. It was founded by successful Silicon Valley executives, with backing from venture capitalists. There is a decent likelihood of an IPO in the future. It is a completely innovative way of opening up the borrowing/lending supply/demand equation to the general public.
Why join as a borrower?
Generally, for any given credit rating, if you have a reasonable explanation for your current borrowing need and can show likelihood of recovery (i.e. recent college grad that incurred some credit card debt, recovering from a costly illness, temporarily laid off and now employed, etc.), you can borrow at rates significantly lower than you're likely paying a credit card company. This is because lenders will seek to bid down loan rates based on their assessment of risk and the middleman is essentially removed (the .5% Prosper fee is significantly less than the overhead/profit margin for credit card companies, who also have to account for fraud and defaults). Why would you pay 25-30% to a credit card company when you can pay 10-15% to Prosper community lenders? It also acts as a great personal finance tool, consolidating several loans into one, which makes it easier to manage your finances.
Why join as a lender?
Prosper.com has been a steady provider of above market returns (roughly 8-12% range), which are non-correlated with the major US stock market indices. This is an incredible mix which is difficult to duplicate by other means in the stock market. By spreading your loans across several borrowers, researching the details of each loan, and relying on some common best practices, you can asymptotically approach or exceed the aggregate return of the listed averages on the site for given credit grades, which can range from 8-12%, depending on the grade.