Q's for those of you using prosper.com (lending)

IRuleYouHard · #1 03-25-2007, 03:21 PM

I know this site has been discussed before but I couldn't find it.
How do you choose your loans?
How often do you have a loan default in comparision to the intrest rate you are getting?
How does the payment process work? Do I get a portion of my money back each month or do I wait until the whole loan is paid off?

wmspringer · #2 03-25-2007, 04:23 PM

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I know this site has been discussed before but I couldn't find it.
How do you choose your loans?

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You can browse through the listings and can also search based on credit rating (AA,A,B,C,D,E,NC), interest rate, amount, D/I (debt to income), etc

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How often do you have a loan default in comparision to the intrest rate you are getting?

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Can't answer personally since I haven't made any loans yet, but Prosper has charts showing the default rates. Naturally, both default rates and interest rates depend largely on credit ratings, where people with AA credit never default but usually pay fairly low (7-11%) interest rates, whereas people with E and NC credit generally pay high (24+%) interest but default a lot more often.

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How does the payment process work? Do I get a portion of my money back each month or do I wait until the whole loan is paid off?

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You get cash back in your account every time the borrower makes a payment.

IRuleYouHard · #3 03-25-2007, 05:42 PM

Thanks for the info... but on the first question.. I was more refering to the process that you personally go through to pick your loans. Like if you go for the sealed deal with good credit or if you gamboool it up with bad credit and why.

Shoe · #4 03-25-2007, 06:15 PM

I put some money in about 10 loans over the last couple months. None have defaulted yet, but my oldest loans are only 2 months old. By reviewing the prosper marketplace performance page, it appears that you can greatly reduce your default percent by only bidding on loans that have 0 current deliquents, and only the loans that do not use automatic funding. However, the other lenders know this and bid the rates on those loans way down now.

I might put some more money in their on occasion, but I have trouble finding loans that I want to fund that still pay a decent interest rate. I'm planning to stick to the stock market for now but might dab a little more in prosper eventually.

BradleyT · #5 03-25-2007, 07:27 PM

The old thread was titled, "ebay for loans" if that helps with search.

Here

lgas · #6 03-25-2007, 07:35 PM

Here's a post that I recently encountered about default rates on prosper.com:

http://www.pfblog.com/archives/6008_...to_worse.shtml

wmspringer · #7 03-25-2007, 08:31 PM

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Thanks for the info... but on the first question.. I was more refering to the process that you personally go through to pick your loans. Like if you go for the sealed deal with good credit or if you gamboool it up with bad credit and why.

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It's good timing...I bid on some loans for the first time Friday and most of them just closed :-) Anyway, I personally look for loans that will almost certainly be paid back (AA,A,B ratings, nothing sketchy in the listing) that pay an above average interest rate. On the riskier ones you may get a lot of interest, but...if you fund 5 loans at 25% and ONE doesn't get paid, you break even.

I've been hesitant about putting money into prosper because there's really no guarantee you'll get it back, but I decided to start small and see how it worked. In a year I'll figure my actual ROI and see if it's worth it.

IRuleYouHard · #8 03-26-2007, 12:06 AM

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Here's a post that I recently encountered about default rates on prosper.com:

http://www.pfblog.com/archives/6008_...to_worse.shtml

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Good read thanks. It does seem that people would put their loans from prosper on the bottom of the repay list just because its from the internet and people do things they normally wouldn't and such. Is there any punishment from prosper for those who don't repay such loans besides a bad credit score?

Shoe · #9 03-26-2007, 12:50 AM

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Here's a post that I recently encountered about default rates on prosper.com:

http://www.pfblog.com/archives/6008_...to_worse.shtml

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Good read thanks. It does seem that people would put their loans from prosper on the bottom of the repay list just because its from the internet and people do things they normally wouldn't and such. Is there any punishment from prosper for those who don't repay such loans besides a bad credit score?

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No, and prosper only reports to 1 credit agency (experian)... the other 2 agencies won't even receive notice of that loan. I think prosper is planning to start reporting to all 3 agencies, hopefully they change that sooner rather than later.

wmspringer · #10 03-26-2007, 01:23 AM

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No, and prosper only reports to 1 credit agency (experian)... the other 2 agencies won't even receive notice of that loan. I think prosper is planning to start reporting to all 3 agencies, hopefully they change that sooner rather than later.

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I believe they report defaults to all 3, they just only report the loan (while it's being paid) to experian.