zcommodore

I was just scanning through my past blog posts and I see I haven't mentioned my 29% loans yet. I've commented about them in various forums now and then so I guess I'll post about them here now.

When I first found Prosper, I saw rates in the teens and thought, "wow, that would be great!" Later, after money transferred into my account, I had found 29% AF loans and went nuts. Eventually, of my first 6 originated loans, 5 of them were 29% AF loans as far as borrower rates go. One had a 0.5% group leader fee.

Later, I scaled down on those high risk loans but then from April to June, I added 6 more 29% borrower rate loans. In total, of my 24 $50 loans, half of them were at the Prosper maximum for borrowers of 29%.

So, how am I doing? Of those 12, 3 are in some stage of late. One is 4+ months late after making 3 payments. One is 2 months late and never made one payment. One is 1 month late after making 9 straight on-time payments. Of the ones that are current, 3 have made one payment (one of those is pending but will be credited to my account early tomorrow morning.) 2 of the current loans have been late at least once and caught up. All but one of the 29% loans were autofund loans. The credit grades range from C to HR. One of the C loans has made a couple of extra payments as well.

Why have I bid on these? I did some math once and figured that for one loan at 29%, if they make their payments on time over the life of the loan and don't pay off early, I will earn ~$25 for each $50 bid. In other words, if I have 3 29% loans and one never makes a payment but the other two pay out over 3 years, I break even. Anything after that is gravy.

Is it possible to find 2 good 29% loans for each one that goes bad? I don't know if that is true or not. So far, I have 3 good ones for each bad one but that only assumes the good ones don't pay off early and don't go bad as well. I'm probably going to scale back for awhile on 29% AF loans due to more loans coming up in my group and the fact that the end results don't appear to add up to what I had hoped they would. It has been a fun experiment though.

As far as my loans that aren't at a 29% borrower rate, the results aren't even as good with those. Of the 12 loans at lower rates, one is 4+ months late, 2 are "Late", 1 is <15 late, and 2 haven't had payments due. Those loans aren't paying enough interest to make up for bad loans as fast as the 29% loans do. Ultimately, I'd be way behind here with Prosper if I weren't getting some group leader fees and referral rewards. Somehow, I think that is the case with a lot of people on Prosper who have been around awhile.