Seriously though, this is the perfect scheme for a used car dealer.
1. Sell used car to any schmoe for 2.5 times the real value.
2. Tell schmoe you don't care if he pays or not.
3. Make the first 4 payments yourself.
4. Sell the payment stream.
5. Make 2 more payments.
6. Allow the loan to default.
7. Repo the car and sell the car to your other dealership for half the value
8. Give sucker lenders investors the proceeds after the repo company you own charges outrageous costs.
9. Sell the same car all over again.
10. You could get profit 100%-125% the value of the car over and over again.
As i typed earlier..It's a CDS for cars
It's brilliant. And even if that isn't what's happening yet (although it sure looks like it might be), it won't take long for someone to figure it out...
I used to think Prosper was an ill-managed, poorly conceived project, with incompetent and hubris-filled management and too much of a willingness to work with whatever shady GL was churning loans...
Which in and of itself isn't exactly sleazy... I never thought Prosper was a downright scam, just stupid.
But if these car loans are indeed what has been postulated here, and Prosper turns a blind eye to it...
Well then, we've crossed the line into full fledged scamdom...
Although, I wonder if it really is going to matter in the long run... I seriously doubt a one-state operation is going to generate the critical mass of transactions needed to turn the red ink into black. Hope that doesn't compel Prosper take dubious measures to balance the books by hook or crook...
