"Lending Club" peer to peer loaning company: thoughts?

[DJ Sensei]

http://www.lendingclub.com/

They seem to facilitate transactions between individuals who have money and people who need money, in a portfolio-style account, and do all the middle work themselves (presumably for a reasonable cut).

What do yall think about this, and is the potential rate of return really something to be excited about? I don't know much at all about business/investing, but I have more money than I need, so good opportunities are always interesting. I'd certainly like the opinion of people who know more though.

[DJ Sensei]

http://www.prosper.com/ seems to do the same thing, but with a wider base of people

[Tupacia]

DJ,

Many of the once-famous Prosper lenders have stopped lending due to both the difficulty of making money and Prosper's perceived "anti-lender" policies (such as not telling the location of the borrower if I remember correctly). The rub with these sites is that usually the only reason someone would be forced to ask for a loan from Prosper is if they have already been rejected by a bank or if they know they will be rejected. There were some statistical analyses done by some members on the Prosper boards saying that it was basically a rigged game against the lenders in the limited data they have.

It's obviously an intriguing concept but once I read the Prosper forums I decided to stay away.

[maxtower]

For now these types of places seem like a better deal for borrowers than lenders.

In theory I like the idea, because it would seem that by cutting out the middle man, better rates for both borrowers and lenders could be had. However, it appears that in practice the normal lending channels are possibly more efficient than prosper. People with good credit can generally get a cheaper loan by using their house or car for collateral and therefore get much better rates than can be obtained on prosper. You're left with the bad borrowers.

I am hopeful in a few years, the market will get better and be profitable for lenders.

[haakee]

Search these forums for prosper.com There was a big thread a while back. I'm not sure I'd want to be a lender in the current market.

[Uglyowl]

http://www.zopa.com/ZopaWeb/

These guys have plans to come to the U.S. Not sure if they will be better than Prosper.