[Shoe]

I have dabbled a bit at prosper.

I have made a total of 6 loans for ~ $400.

So far.

1 loan is paid off early.
1 loan is in collections (~ 2 months)
4 loans are still current.

I can't remember my average loan %, but I believe it is around 16%. If the rest of my loans don't default I will come out just barely ahead, otherwise I will be down. Considering other places I could have put my money, I definitely could have made more money elsewhere.

Prosper CAN be a place to earn a decent return on a small amount of money, if you research your loans properly. But if you are only willing to invest $50 - $100 per loan, it is not even worth your time to research that loan. I have done some analysis on the loan data they provide (I think it is called prosper marketplace performance or something like that), and for the most part, as long as you only select loans from people who do not currently have any delinquencies, have not had any delinquencies in the last 7 years, and do not include auto-fund loans, you lower your expected default rate by almost as much as possible. You might be able to tweak the system a bit more, but those are the only searchable options I found to make a statistically significant difference. However, those loans also get bid down like crazy now a days.

I also try to avoid any sob stories (sob as in crying/whining). If you try to bail someone out who can't currently make their payments for reason x, they are just going to give you another sob story in a couple months. Try to find people who really seem to be on the right track (although of course you can't tell if they are telling the truth or not).

I personally believe you are much better off investing in the stock market. Much higher potential rewards, with less risk, while at the same time having more liquidity (you can't sell your prosper loan if you need the cash -- you are potentially stuck receving the minimum payments for the next 3 years)

All that being said, if you decide to invest in Prosper, I wish you the best of luck.