I just thought I’d use this space to thank all my great Prosper borrowers. Some have hit bumps in the road, but they’ve all either paid off their loans or continue to be responsible and make their payments.Many lenders haven’t been so lucky. I particip…

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Continue reading → A Note to Borrowers

This is one for all of you Prosper borrowers that have not gotten a loan funded on the first try, get discouraged, quit and never come back. That’s not the case for Prosper borrower mvbrothers2 who tried to get their listing funded an incredible 57 times before finally getting the loan.

I didn’t…

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Continue reading → Borrower Gets Funded on 57th Try

If you are a Prosper lender but also have a loan, here is something interesting I learned recently: you can make a payment on your loan directly from your Prosper account.
I wasn’t aware this was possible. I have always had my payments automatically deducted from my account and never bothered to…

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Continue reading → Lenders with a Prosper Loan: You Can Pay From Your Prosper Account

Snowflaking is a way to save on interest. The general principle is to pay in a small extra amount towards a loan every month, a $5 snowflake here, a $10 snowflake there starts to build into a snowball which, if rolled downhill, compounds. These small amounts might not seem like much but they…

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Continue reading → Snowflaking your Prosper Loan to Save Interest

Endorsements are a useful tool to help get potential lenders interested in your Prosper loan. There are a few ways to get the most out of this technique which can sometimes make the difference in whether your loan gets funded.

Endorse early

First, get your endorsements in line before you create…

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Continue reading → How to Make an Endorsement Count

The first and most important thing borrowers should realize is that Prosper is not a charity. All of my charitable contributions go to Arkansas Children’s Hospital and St. Jude’s Hospital (see links on this blog.) When you accept a loan on Prosper, y…

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Continue reading → Borrowing on Prosper, My Opinion

If you want to read a great book that will turn a lot of ecomonic theories on their heads, read Freakonomics. It’s a great book. The author, Stephen J Dubner, is apparently a fan of Prosper and makes some interesting observations about what he sees in the marketplace.

The article is called…

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Continue reading → Prosper Written About in the New York Times

I spent some time roaming the latest entry into P2P called Fynanz, which specializes in student loans. Not much going on there at the moment. I saw two loan listings, one of which was a ‘faker’ for testing purposes. Loans are done off of current LIBOR rates and adjusted accordingly. Info found here. One big [...]

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Continue reading → Fynanz…zzzz! Anybody home?

How much is a penny worth? $205.65 (no, copper hasn’t gone through the roof, yet!)Consider a clean A listing like this one. Not a lot of early enthusiasm for this loan by lenders, part of the problem was the (old) NJ rate cap of 13.56% but if we fa…

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• Penny UK Great Britain Europe Coins World Coins Paper Money

Continue reading → what a difference a penny makes ($205.65)

This is the second post in a series on my recent experience applying for mortgage refinancing.
While applying for mortgage refinancing, I asked the loan officer for credit score wisdom based on her experience. I knew most of the advice but I found some of her comments interesting so I’ll post the collection of advice, [...]

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Continue reading → Credit Score Advice from a Mortgage Lender: Mortgage Refinancing Experience

The Prosper listing creation process has now been fixed at 7 days. This is intended as a means to simplify the loan generation process. Its also viewed as a way to create more fundable listings.

I’m not sure I agree with that. Some loans are more sure to fund than others, especially in the…

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Continue reading → Listings on Prosper are now all 7 days

The Prosper listing creation process has now been fixed at 7 days. This is intended as a means to simplify the loan generation process. Its also viewed as a way to create more fundable listings.

I’m not sure I agree with that. Some loans are more sure to fund than others, especially in the…

[...]

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• Next Generation Star Trek Science Fiction Collectibles

Continue reading → Listings on Prosper are now all 7 days

Borrowing money from a 401(k) retirement account is an option for many people, but not a financially smart one. There are many downsides to borrowing against your 401(k), and now we can add another to the list: Lending Club can get you the money you need, so you have a better option than borrowing from [...]

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Continue reading → Borrow Money from Lending Club, Not Your 401(k)

I’ve noticed a lot of borrowing to reinvest in Prosper listing recently. Maybe I’m just paying more attention but it seems like they have increased. I’ve been asking the same question on each listing that I see:”What is the spread you are expecting b…

Continue reading → Borrowing to reinvest in Prosper I don’t get it

Some good news from Prosper Days 2008 for both borrowers and lenders: Prosper is planning to modify their policy on when payments are pulled from borrowers bank accounts to better match their pay days.
Up until now, the date that a payment is due has always been dependent on the initiation date of…



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Continue reading → Payment dates are going to change to improve loan performance

One of the fastest turnoffs for me when judging the merits of a loan request on Prosper is a meager description of why the borrower needs the money. I have seen descriptions as tiny as “Got some bills to clear up” or “Consolidating cards”. This, frankly, won’t do.

It’s been proven that the longer the description (within reason) the better the chances of getting funded are. As lenders, we want to know what the money is for and why you feel you are qualified for the loan. While many lenders on Prosper don’t care and just look at the numbers, most don’t.

There are a few reasons a short description is a turn off. First, it appears the borrower has something to hide. Second, it appears the borrower doesn’t really care about this listing implying they don’t care about paying it back. Next, lenders want to know if you have writing skills, this may sound ridiculous but its true: when something is very badly written it demonstrates a lack of care which implies no repayment. Furthermore, lenders just want a basic idea of who someone is, the way a borrower describes their needs tells lenders a lot.

As far as better descriptions go, there is certainly room for improvement. My biggest pet peeve is the “magical thinking” listing that seems to imply an alignment of the stars or some other metaphysical event that will cause Prosper lenders to flock to a listing. This attitude implies the loan will be repaid magically as well. A good description does 4 simple things:

• Clearly describe why the loan is needed
• Clearly describe your financial situation
• Explain any marks on your credit
• Clearly describe why and how you intend to pay

You’d be amazed how many loans don’t even achieve one of them. There is a second good reason to do this: once you lay this information out, it should be obvious to you as well whether you can really afford this loan. If your numbers don’t clearly demonstrate enough income to fund the loan consider asking for less or changing your budget so you can actually afford it.

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Continue reading → Borrowers Need Longer and Better Descriptions for Better Chance of Funding

I wonder if borrowers have figured out how to game the portfolio plan standing orders? There seems to be some opportunity for borrowers to tailor their loan listing to fit a portfolio plan standing order. For example, consider a ‘B’, non-AF, zero DQs…

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Continue reading → Gaming the Portfolio Plans

The question of having loan terms other than 3 years comes up from time to time. Like this post over on Prospers forums today.The single fixed term we have today does make things simpler for lenders. If the terms were variable, say from 12 to 60 month…

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Continue reading → Shorter or Longer terms for Loans on Prosper

It seems like a lot of borrowers are looking for money to invest in one thing or another. A business idea, or Prosper loans, or sometimes stocks like this listing. I’d guess that requesting funds for some type of investment is second only to debt con…

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Continue reading → Borrowing to Invest

Is borrowing money on Prosper a good deal? The short answer is yes, the longer answer is it all depends on your situation. I got a small loan to see how the process worked and to see what kind of an interest rate I could get. The process was simple,…

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Continue reading → Borrowing on Prosper

Credit card consolidation loans are among the most common types of lending taking place today. Often times I read about people that have multiple cards at 20% - 30% interest rates. Even for cards at lower rates, depending on your credit, getting a consolidation loan is a great idea, and Prosper can help.

If you have a significant amount of credit card debt things can begin to spiral out of control with bills piling up. The money going to finance charges on credit cards eats up income needed for other important things and as you pay small amounts every month, it can look like you will never get out of credit card debt. This is why a credit card consolidation loan thru Prosper can help.

Prosper is an online marketplace like Ebay, except for loans. You post a loan request and people bid on your loan until its funded. If your loan gets funded early, the interest rate can go down as lenders start to bid lower and lower on your rate.

For a variety of reasons, its hard to pay off your balances every month. While credit cards can be convenient and credit card providers are very willing to give you cards, the interest rates they charge are often much higher than average.

If you have excellent credit, you can get a Prosper loan from as little as 7% or 8%. If you are paying 20% interest now, you can save a lot of money and pay the balance off much faster.

For example, if you owe $10,000 and are paying 20%, you are paying $2,000 a year in interest. Just to service this debt, you must pay almost $170 a month in interest! You have to pay more just to lower the balance.

But let’s say you got a Prosper loan at 9% to consolidate the debt, that would mean you would only need to pay $75 in interest, a savings of almost $100 a month in interest. This can have a huge impact on how quickly you get out of debt.

Prosper loans are amortized over 3 years. You can make payments any time you want, and you can pay the loan off early without any extra fees. Prosper is also a very safe place to borrow money.

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Continue reading → Lower Your Interest Rate: Credit Card Consolidation with Prosper

One question that I seem to get over and over via email thru my blog is if Proser is safe for lenders and borrowers to use. In a nutshell, yes, it is very safe.

Prosper has many safeguards for both lenders and borrowers to ensure that things like personal information is not divulged and fraud cannot take place as a result of the website. Prosper also has a community of over 500,000 members to support eachother. In the two links below, you will see a long bullet pointed list of things which show why Prosper is a safe place to borrow and lend money.

Read the links below and judge Prosper’s features and safeguards for yourself. Peer to peer lending is growing fast and Prosper represents the leading online marketplace for this service.
If you are interested in becoming a lender, Prosper makes the process of joining and funding loans very safe and easy, you can read in detail about Prosper’s features here:

One question I seem to get over and over via email is if Proser is safe for lenders and borrowers. Safe is a relative term and would have to consider their own personal level of risk and security. But as far as the service Prosper.com is concerned, yes it is safe.

Let me take a moment to mention some of Prosper’s features and safeguards, from this list you can make your own judgements.

Is Prosper safe for Lenders?

If you are interested in borrowing money using Prosper, your identity is safe and you have complete control over your listing and eventually your loan. You can read further here:

Is Prosper safe for Borrowers?

If you would like to explore person to person lending, you can join Prosper here.

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Continue reading → Is Prosper Safe?

Prosper is a safe marketplace to borrow money from people just like yourself. Loans are originated by Prosper and your payments are pulled directly from your bank account by Prosper. Here are some of the points which make Prosper a safe place to borrow money from other people:

• Prosper has over 100 million dollars in loans and over 500,000 members
• Prosper is licensed in every state it operates in
• Prosper verifies your credit, bank account and homeownership
• A Prosper loan can increase your credit score
• Prosper has an identity theft guarantee
• Loans are all given a credit grade, AA, A, B thru E and HR (high risk) depending on your credit and other factors
• Loans are reported to credit bureaus
• If you fail to make the required payments, your case is sent to a collection agency
• Detailed information about your credit history in your listing cannot personally identify you
• All identifying information about you is kept private, Prosper uses a screen name similar to that of Ebay
• If Prosper should go out of business, your loans and credit score is safe, the loan will continue being serviced via a third party
• You can pay off your loan at any time without penalty
• All loans must be reviewed before you are approved to ensure the listing is accurate
• There is a large community of lenders and borrowers out there willing to help
• You can re-list your loan if it does not fund the first time
• Prosper is regulated by privacy and fairness Governent acts
• Interest rates will not change thru the term of the loan

Now, there is no guarantee your loan will fund, you need to provide as much information as you can and make sure the interest rate you are offering is competitive. You can learn more about getting a Prosper loan here and you can join Prosper here.

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Continue reading → Is Prosper safe for Borrowers?

Often times friends and family members loan eachother money, but often with a verbal agreement and little expectation of when payments should be made. This often goes badly and friendships are damaged in the process. To establish some security and structure for replayment of the loan, why not use a service like Prosper to manage a loan between friends and family instead?

Here are a few reasons its a good idea:

• The loan is reported to credit bureaus, if your friend or family member doesn’t pay, his credit is affected
• Payments are scheduled monthly and directly deducted from the borrowers bank account
• You can agree on an interest rate and let Prosper.com calculate the payments for you
• It gives your friend 3 years to pay the money back
• Removes the discomfort of discussing terms
• You can loan your friend part of the money and let other lenders bid on the loan as well

To make such an arrangement, first join Proser as a lender, and have your friend join Prosper as a borrower. Once you have joined, have your friend create a loan request. There are 2 ways to do this, and this is very important: automatic funding or a loan auction. What does this mean?

Automatic funding means that the loan is automatically created once the entire amount is funded at the requested interest rate. So if you loan your friend $5,000 at 8% interest, that’s the final rate and once you place the $5,000 bid the loan review process begins and eventually gets funded.

The loan auction is like Ebay. Your friend puts up the loan request and you bid on it, but others will have a chance to bid the loan rate down. Its not a bad idea, since your friend will have the chance to get the rate lowered, and you might wind up loaning less money!

Lastly, there are situations where you can’t loan your friend or family member the $10,000 he needs. No problem. Have the friend or family member create the loan request and place a bid for what you can loan, for example $5,000, and allow other lenders to help your friend out as well by funding the remaining $5,000.

Prosper.com is not only for strangers to lend eachother money, it can be a valuable way to loan friends and family money safely. Also, Prosper will contribute $25 towards the loan if you sign up with a referral from this link. You can learn more about the referral program here.

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Continue reading → Want a Safe way to Loan a Friend or Family Memeber Money? Use Prosper.com

One of the most common mistakes someone seeking to borrow money on Prosper.com makes is to engage in what I call the “fantasy loan”. The “fantasy loan” is when a borrower posts a loan at a ridicilously low interest rate and waits in a false hope that this loan will ever get funded. With this type of listing, it’s a fantasy to even expect a lender to place a bid, see for yourself.

So, let’s define terms. What is a “fantasy loan”? It’s when a registered borrower posts a loan request at or below a 5% interest rate (you can probably stretch this to 7% as it is very rare for even 7% interest rates to get funded) in the hopes that somehow the entire lending community will ignore the risks and return on investments of unsecured loans and fund a loan a well below half of the normal interest rate.

This magical thinking is more common than we might think: of the 2267 loan requests posted as of the writing of this article, 63 of them are at or below 5%. That’s 5.3% of all the listings on the Prosper website that will never even be considered for a loan. Let’s take this a step further, of the 63 loan requests, 37 of them are for E and HR credit grades! There is actually someone posting a loan at a 1% interest rate with a HR credit rating. Enough said.

Borrowers might think this has no impact, but many, after realizing that they must be competitive to get a loan funded often re-list the loan request at a more reasonable rate. Then re-list again, and again until they abandon what they think is ‘reasonable’ to what is actually ‘competitive’. Too many re-lists are damaging, just as too many inquiries in your credit report are, so keep this in mind.

For Prosper.com to work, borrowers and lenders have to come together and let the website’s marketplace determine what is a reasonable interest rate. Lenders like myself are interested in loaning money, but we also don’t want to sift through a large number of “fantasy loan” listings.

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Continue reading → For borrowers, fantasy interest rates just waste time

If you are looking to get a loan using Prosper.com then this video can be very helpful in getting you started. There is lots of practical information as well as good advice. This video is a must watch for anyone new to Prosper who is looking to join so they can borrow money using person to person, or (often called peer to peer) lending.

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Continue reading → Video Tutorial of How to Borrow Money Using Prosper

Now let me preface this article by saying that there are instances in which canceling a listing is not appropriate, but in others it’s perfectly reasonable to do so, and in fact it benefits lenders as well.

When you are using Prosper.com to try and get a loan, often times you make a fundamental mistake like asking for a loan at too low an interest rate. While this loan may get a few bidders, the vast majority are never funded.

Many Prosper borrowers re-list their loans to correct such mistakes and increase their chances of funding. Why bother waiting until the loan expires? Cancel it. Start again. Get your new loan request up faster and release a lenders funds so that they can either re-bid on your loan again or move on to other loans. An example of this would be a 9 day loan in its 4th day with only 5% funding on $10,000. At this rate, it’s very unlikely the loan will be funded. Trying again at a different interest rate would be a more effect way to move forward rather than indulging in hope when the chances are heavily stacked against you.

Now, when is it not appropriate to cancel a listing? How about when it’s fully funded and with hours to go? Many people start at artificially high interest rates hoping to attract lenders but then get disappointed when their interest rate doesn’t get bid down enough. You should never create a listing at an interest rate you are not comfortable paying. It’s very inappropriate to strand lenders in this way.

So, cancelling a listing should only be done in situations where it benefits both the borrower and lender. If you are looking for a loan, you can check out Prosper’s borrowing details here.

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Continue reading → Borrowers shouldn’t be Afraid to Cancel a Listing

This post is in response to a post I saw in the Prosper Lender forums requesting for stats on defaults vs. DTI. To obtain this data, I have queried all the loans that have been paid in full, defaulted, or repurchased from 2/1/2006 - 7/19/2007. The query ended on 7/19 because I wanted [...]

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Continue reading → Default Rates broken down by Credit Grade and DTI Buckets

The answer is “YES!” and I have done some number crunching to prove this point. I have queried all the expired or completed listings from 2/6/06 to 11/1/07 and counted the number of characters in the descriptions. The resulting statistics was surprising but understandable.

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Continue reading → Does the amount of content in the Description of my Listing really matter?

Using the Prosper API, I have compiled all the bid data ranging from 4/2/06 - 11/3/07 and counted the number of bids in hourly increments. All types of bids (withdrawn, winning, outbid, and partially participating) were included to obtain a real sense of the raw bidding activity. You can hover over the points [...]

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Continue reading → What time of the day are lenders most active?

To answer this question, I queried all the bids on Prosper.com from 4/2/06 - 11/3/07 and included all types of bids: withdrawn, winning, outbid, and partially participating. This should give us a good sense of the raw bidding activity that goes on.

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Continue reading → Which day of the week are lenders most active in bidding?

Believe it or not, picking the right day of the week may have an impact on the amount of funding for your listing. To answer this question, I have utilized the Prosper.com API to obtain the statistics for each day of the week. I have queried all the listings dating from 10/28/06 to 10/28/07 [...]

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Continue reading → Which day of the week should I end my listing?

I have utilized the Prosper.com API to obtain the statistics that I hope can guide you in answering this question. I have queried all the listings dating from 11/5/06 to 10/27/07 (almost a year’s worth of data) except for the ones that are still currently active. Please note that this data includes listings [...]

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Continue reading → How long should I have my listing for?

Here is a neat little calculator that displays a bar chart showing how listings has resulted in the past given the credit grade and the loan amount requested. The results will give a count of the total number of similar listings as well the percentage of listings that were canceled, completed, expired or withdrawn. [...]

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Continue reading → Loan calculator with statistics for all listings from the last past year

In order to get a good idea of what you should do for your listing, you should first read the post on Lending Tips so that you can get in the mindset of what lender’s are looking for. With that being said, here is a list of criteria that many lenders look for in [...]

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Continue reading → How do I create a successful listing on Prosper?

In the past, we’ve discussed how nearly half of Americans are concerned about their outstanding credit card debt. With teaser rates, high fees, minimum payment increases, and similar issues, it’s no wonder that such concern exists. A new study finds that these concerns don’t necessarily prevent consumers from borrowing.
As reported in a recent article, consumers [...]

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Continue reading → Debt Discomfort Doesn’t Prevent Borrowing