Friday, November 2, 2007

Screw the Banks! Have you heard of person-to-person lending? Read this if you need money-- or want to invest money.

Todays blog-- for once-- is not a rambling about my views on something. Today, I am providing a public service to those looking for money-- or looking for a great investment opportunity.

On NPR this morning I learned of this wonderful concept of person-to-person lending. I mean- borrowing money from friends, family and neighbors- and loan sharks- has been happening since the beginning of currency. However, this person-to-person lending has stormed onto the Internet, and there are some great success stories on both ends, lender and borrower.

The company that NPR profiled this morning is called Prosper. The site allows people to lend or borrow money- and manage payment, etc. all from one place.

Loans from Prosper:
Users can ask for a Prosper loan from $1000 to $25,000 (certain states have limitations)-- those borrowing on Prosper can create a listing- just like they would on an auction site- explaining their need. Pictures can also be uploaded as well, which I think is a great option especially if the loan is for a house-related purpose. Then, the loan is listed in the listings section and lenders can "bid" on your loan- a $50 minimum. So- this is not like one person out there is giving another $5000- more like a community of people chipping in.

When the Prosper loan is fully-funded- after everything is reviewed- the money is automatically put into your bank account, minus the fees associated. How cool is that?

Lenders get to ask questions to verify anything. Credit score and debt to income ratio is displayed on your listing, but only to registered lenders. One thing I did notice was that people really failed to proofread their listings. My take is that people want to lend to smart people-- and if someone wants to "CONSALIDATE" their loan... or promised the loan will be "PAYED" on time-- they will be ignored.

There are forums, webinars and other help areas to assist borrowers to create successful listings.

Investing in Prosper:
People who are looking to get a good return on investment may want to look into Prosper-- when people get into the high DTI or low credit score area, interest rates go up-- some people in states that allow it will pledge they will pay 25% interest! So, the ROI for lending money on Prosper can be very lucrative. I did not read too much into the lending part, but I believe what happens is that a portfolio of investments is created and the lender is paid by Propser monthly.

How does Prosper make out? They charge an origination fee off the top of the loan and then take 1-2% of each loan, while the lender gets the rest.

This is a sound company with huge financial backing, as well as a community of 450,000 people
and has thus far loaned over $93M.

I did it
I have been wanting to sell dream items on line for a long time now, but just didn't have the start-up money to get an intial inventory-- so I created a listing. Let's see what happens. Here is a link if you want to try it too.... either borrow some money, or make some money!!

Great Rates, No Banks. Borrow. Lend. Prosper.

1 comment:

Luana said...

People should read this.