Recently my friend introduced me to www.prosper.com. This is a person-to-person lending site that he had a very good experience with. I personally have not used this site but I’ve gotten positive feedback about. Has anyone used a person-to-person lender before? Can people share their experiences?
http://www.prosper.com/
Prosper, America’s largest people-to-people lending marketplace, connects people who need to borrow money with people who have money to lend.
Connecting people-to-people eliminates the need for borrowers to go through a bank for a loan, and lenders can expect more from their money while helping fellow Americans.
? Borrowers create a listing and set the interest rate they’re willing to pay
? Lenders place bids with as little as $50 toward the loan
? Prosper combines the bids with the lowest rates into one simple fixed rate loan
? The loan amount is deposited directly into your bank account.
Here some frequently asked questions about the site.
Frequently Asked Questions « Back to help topics
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? Identity Verification
? Borrowing
? Lending
? General questions
What is Prosper?
Prosper is a marketplace for credit that enables people to lend money to other people in a safe, efficient manner. Prosper is a leap back to a time when people formed credit communities to help themselves live better lives and earn a fair return on their money. Prosper’s founding principle is that people from close communities act more responsibly towards each other. Prosper leverages this powerful concept of community responsibility and applies it to person-to-person lending—resulting in better interest rates for people that borrow and lend.
Prosper enables borrowers to request loans up to $25,000 by posting listings indicating the amount they want to borrow and the maximum interest rate they wish to pay. Lenders search for and select these listings based on the borrower’s credit history, debt profile, and other factors. Lenders bid on listings by indicating a minimum rate they are willing to accept. When a loan is matched between borrower and lender, Prosper handles all of the tasks needed for payment and collection of the loan.
Identity Verification
What is identity verification?
For the safety and security of the marketplace, it is important that Prosper makes every effort to ensure that all individuals participating in the marketplace are 1) a real person, and 2) the same person they say they are. To this end, Prosper takes extra care in verifying the identity of all borrowers and lenders.
What will it take to get verified?
When you create a listing as a borrower or open your account as a lender, your identity will be verified against data from credit reporting agencies and other identity and anti-fraud verification databases. You will be required to provide your name, date of birth, Social Security number, address and telephone number. Based upon this and other data, Prosper will verify your identity.
What if I don’t pass identity verification?
There are some cases in which real, legitimate people don’t pass the Prosper identity verification process. If this happens to you, there is a possibility that our information about your identity is erroneous, or you have a fraud alert on your credit report, in which case we will contact you and may ask for faxed proof of identity before allowing you to continue as a borrower or lender.
What happens in case of identity theft?
Prosper has a 100% Identity Theft Guarantee in place to protect borrowers and lenders from identity thieves. If a lender is the victim of a defaulted loan from a person who has committed identity theft, Prosper will repurchase the loan for the unpaid principal amount, and will work with law enforcement authorities to track down and prosecute persons who have committed identity theft.
Borrowing
Who are the borrowers?
A Prosper borrower is any person who is a U.S. resident with a credit score of at least 520, a bank account, and a social security number. After passing Prosper’s identity verification and anti-fraud checks, borrowers can request unsecured loans from $1,000 to $25,000 at rates they select.
What kinds of loans are available on Prosper?
Borrowers can request 3-year, unsecured, fully amortized loans up to $25,000. Borrowers can repay the full amount of the loan at any time; there are no early payment penalties. Learn about creating a loan listing.
What is the collateral for these loans?
There is no collateral on Prosper loans—they are all unsecured loans. In this way, a loan from Prosper is a lot like a personal loan from a bank or a credit card. Lenders base their lending decisions on borrowers’ credit grades and other factors. Learn about credit grades.
How quickly will a borrower receive money once a loan is matched?
Borrowers typically receive their loan within 2 to 7 days of the end of a successful listing.
How are interest rates and payments calculated?
Interest rates are based on the rate selected by the borrower which is then matched (and possibly bid down) by participating lenders.
Payments are due once a month, based on a fully-amortized repayment schedule over a 3-year period. Each monthly payment is the same and there is never a balloon payment. By the time the loan term ends, the loan has been completely repaid. Try the loan calculator to see the monthly payment and fees associated with a Prosper loan.
Will lenders know their borrowers’ identity?
No. Everything on Prosper is done anonymously, and there is never a need for lender and borrower to contact each other. If a lender and a borrower do communicate through the Prosper web site, it is entirely up to each person to choose how much information they wish to share with the other.
What happens if a borrower misses a payment?
Borrowers who miss payments on Prosper face the same consequences that they would if they missed a payment on a bank loan or credit card: their late payment is reported to credit reporting agencies, and their late loan is assigned to a collection agency. Borrowers also incur late fees for missed payments, which are collected by Prosper and passed onto the lenders for that specific loan. Learn about what happens to borrowers who are late with payments.
What happens if a borrower repays their loan early?
Borrowers can make extra loan payments or repay the loan entirely at any time without penalty.
Can Prosper help borrowers build credit? Will delinquency be reported?
Yes. Because Prosper reports all payment activity to credit reporting agencies, using Prosper is an excellent way for new borrowers to establish or rebuild their credit score. In addition, delinquencies are also reported to credit reporting agencies, so bad performance will affect a borrower’s credit score negatively.
Does creating a listing on Prosper affect a borrower’s credit score?
No. Creating a listing for a loan is not counted as a loan inquiry on the borrower’s credit report and will not lower his or her credit score. A loan inquiry is only created when a borrower’s loan is fully originated.
Lending
Who can lend money on Prosper?
A Prosper lender is any person who is a U.S. resident with a bank account and a social security number. After passing Prosper’s identity verification and anti-fraud checks, lenders offer money to borrowers at a rate they select, often earning a much better interest rate than putting their funds in a money-market account or CD. Learn about becoming a lender.
How much money can someone lend?
Because Prosper allows lenders to bid on all or parts of loans, lenders can fund as little as $50 and as much as $25,000 on any particular loan listing.
How should people that lend evaluate loan listings?
Prosper allows lenders to select listings based on their own criteria. Lenders can evaluate listings by a borrower’s credit grade, debt profile, or other factors. Learn about finding loan listings.
For example, a successful filmmaker may want to lend money specifically to independent filmmakers by browsing individual listings. Alternately, a lender may create a portfolio plan to fund any loan listings with specific credit criteria. Learn about placing bids.
If I make a loan through Prosper, what guarantees do I have that the loan will get repaid?
There are no guarantees that your loan will be repaid. We try to give lenders as much information as possible about the credit worthiness (or “credit grade”) of the borrowers on the site, their debt burden (known as the “debt to income ratio”), and the expected default rate of a borrower with their credit grade, which is based on historical data from Experian, one of the three major credit reporting agencies.
The way to ensure a good return on your investment is to diversify your lending—use portfolio plans to place bids on many listings, and spread your risk across many borrowers. Even if one of your borrowers defaults, the return from your other borrowers should make up for the loss. Learn about diversifying your lending with portfolio plans.
How should people who lend spread their risk?
Because Prosper allows lenders to bid small amounts on all or part of loans, it is easy for lenders to create well-diversified portfolios. Using Prosper’s portfolio plans feature, lenders can efficiently diversify their portfolio by automatically funding listings that reflect their pre-defined criteria.
For example, a lender can bid as little as $50 on any loan listing. To diversify their portfolio, a lender might want to spread an overall investment amount of $10,000 among several loans. Learn about diversifying your lending with portfolio plans.
What happens if a borrower does not repay their loan?
Borrowers who miss payments on Prosper face the same consequences as they would if they miss a payment with any form of bank credit including the reporting of late payments to the credit bureaus. Borrowers also incur late fees, which are collected by Prosper and passed onto the people that loaned the money.
When a borrower’s payment is late, Prosper communicates directly with the borrower to encourage repayment. After 15 days, Prosper notifies the borrower’s friends and group leader of the late payment. After 30 days, Prosper engages a nationally-licensed collection agency, giving borrowers 90 days to bring the account to current. At more than 120 days past due, the loans are sold to a debt buyer. At that point, the borrower’s credit report is negatively impacted with a default and they are banned from borrowing on Prosper ever again. Learn about what happens to borrowers who are late with payments.
Can I collect on late payments myself?
Under no circumstances should you attempt collection on a late payment yourself. Compliance with all state and federal laws while attempting to collect a delinquent loan is not trivial. When necessary, Prosper ensures all collection activity is performed by licensed and professional collection agencies. Lenders who undertake debt collection (even if they are a debt collector by trade) are in violation of Prosper legal agreements and will undermine the collection agency’s ability to do their job. Moreover, in doing so you run the real risk of creating a legal liability for yourself. Learn about Prosper collection agencies
Will borrowers know their lenders’ identity?
No. Everything on Prosper is done anonymously, and there is never a need for lender and borrower to contact each other. If a lender and a borrower do communicate through the Prosper web site, it is entirely up to each person to choose how much information they wish to share with the other.
Are lenders’ deposits insured?
When preparing to post a bid, a lender transfers funds electronically, in an amount at least sufficient to cover the bid, into a funding account maintained by Prosper at an FDIC-insured depository institution, for the benefit of lenders. Amounts in the funding account are insured by the Federal Deposit Insurance Corporation, or FDIC, for the benefit of individual lenders on a pass-through basis (i.e., up to $100,000 per individual).
Do lenders earn interest on deposits?
Lenders do not currently earn interest on deposits to their Prosper account. Because of rules associated with pooled accounts (such as the ones that we use to hold your money), we are not allowed to earn interest on those accounts. However, Prosper is actively looking into ways that we can allow for interest to be earned on amounts deposited.
Prosper enables lenders to transfer money to Prosper as needed to bid on loans. How much cash you keep in your Prosper account will depend on how frequently, and in what amounts, you want to bid.
Additionally, using portfolio plans and API bidding tools can significantly improve the pace at which you acquire loans and will allow you to move more money faster. Because portfolio plans are automated, they can minimize the amount of time your money sits idle. Learn more about portfolio plans.
General Questions
How is Prosper regulated?
Lending and loan servicing activities on the Prosper marketplace are subject to state and federal regulation.
Loans originated through the Prosper marketplace are made by WebBank, a Utah-chartered Industrial Bank, which is regulated by the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC).
Prosper Marketplace, Inc., a Delaware corporation, is subject to examination, supervision, and potential regulatory investigations and enforcement actions by state agencies that regulate consumer credit, trade and commerce, and federal agencies, such as the Federal Reserve Board and the Federal Trade Commission, that administer the federal consumer protection laws, trade and commerce.
Prosper and the loans originated through the Prosper marketplace must comply with applicable state and federal lending laws such as the federal Consumer Credit Protection Act, including, as applicable, the Truth-in-Lending Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act and Electronic Fund Transfer Act, as well as the federal Electronic Signatures in Global and National Commerce Act (ESIGN) and other federal and state laws governing privacy and data security and prohibiting unfair or deceptive business practices.
How does Prosper make money?
Prosper charges a 1-3% loan closing fee each time a loan is funded. The amount of the fee depends on the borrower’s credit grade, and is paid by the borrower at the time a loan begins. In addition, Prosper charges lenders an annual loan servicing fee of 1% which accrues daily along with the loan interest. Learn more about fees.
What if Prosper were to go out of business?
First, no new loans would be created. All lender funds not actively associated with a loan would be returned to the individual lenders immediately, and all existing loans will be serviced to completion by a third party loan servicing agent.
Borrowers are still legally obligated to make payments on their loan. Prosper’s existence (or lack thereof) does not change that obligation, and failure to meet those obligations would result in the same consequences for the borrower.
Who is behind Prosper?
Prosper’s CEO and co-founder, Chris Larsen, was formerly the CEO, Chairman and Founder of E-LOAN, an online consumer lender dedicated to providing consumers with a fast, transparent, and low cost way to obtain mortgage, auto and home equity loans. Under Mr. Larsen’s leadership, E-LOAN originated over $27 billion in consumer loans. In June 2004, an independent study conducted by TRUSTe and The Ponemon Institute ranked E-LOAN as one of the top 20 most trusted companies for privacy in America. And in March 2005, E-LOAN received the overall highest rating in the independent Online Customer Respect Study of North America’s largest financial services firms.
In 1996, Mr. Larsen founded E-LOAN based on the belief that by leveraging the Internet and building a company on a foundation of pro consumer values, the consumer lending experience could be completely revolutionized. In addition to using the Internet to make the lending process more favorable for consumers, Mr. Larsen has drawn upon pro consumer values to build E-LOAN into a trusted brand by taking radically pro consumer actions.
For example, E-LOAN became the first company to provide consumers with access to their credit scores and to advocate credit score disclosure laws. In addition, Mr. Larsen and E-LOAN co-founded and financially backed Californians for Privacy Now (CFPN), a coalition credited for the passage of the strongest consumer financial privacy protection law in the nation. More recently, Mr. Larsen has been advocating that financial institutions disclose their offshore outsourcing programs to consumers and enable them to opt-out of them.
Prosper has raised $40 million in funding. We are supported by an expert Board of Directors including Paul Hazen, former Chairman and CEO of Wells Fargo, Jim Breyer, Accel Partners, investor in Facebook and Walmart, and Bob Kagle, Benchmark Capital, investor in eBay, Jamba Juice and E-LOAN. To review our Board and Management profiles, please click here.
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2. “I don’t know anything about the company.” Chances are the interviewer will ask what you know about the company. If you say you don’t know anything about it, the interviewer will wonder why you’re applying for the job and will probably conclude you’re after money, not a career.
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As I was reading other bloggers pages on Personal Finance, I noticed they are all the same! They are all blogging about getting out of debt and being frugal. These types of blogs are probably very useful for people in their 30’s. What if these people had a handle on their finances at a younger age, say right out of college. They probably wouldn’t have a blog about getting out of debt, they would be debt free and building their wealth already. This brings me to the goal of Money Answer Tree.
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