This is exactly what my thoughts on prosper have been for some time now. The concept is a winner. They should be able to outperform banks easily and offer lower rates because they don't have to deal with same costs as banks. Instead they hike fees, focus on retarded shit like borrower "feelings" instead of focusing on maximizing lender returns which would lead to lower rates which would lead to more people going to prosper. They didn't do everything wrong, but the main focus on the borrower and high fees is the wrong approach. This is not a hard thing to understand which leads me to believe that higher ups at prosper are just yesmen which is exactly what this guy is saying.
i hope i get this quote thing right. you think its easy to beat banks at the game they have been playing for 100s years? think again. what are the costs of banks? a lot of it is in the ways they detect and avoid nonpayers and collect money from those they acidentaly lend to that are nonpayers. the only way prosper could beat them is if prosper had a way to prosecute nonpayers in all the states and for that they need presence there. right now you can see how screwed prosper is becuase ever state is on their ass for making the loans and for directly involving lenders in the loans. banks avoid all this. prosper still has to increase costs to get the right people in all the states. the banks will eat prosper for lunch. if you remember, some big company took over eloans from larsen. he was probably hopoing the same would happen here but the bad economy got in the way. peace out.
Of course they can easily beat banks. Their costs are way lower. They don't have branches, tellers, branch managers, loan officers etc... That's all costs. I already had a suggestion on how to deal with bad loans which is to allow people to create a platform where people can sell their loans to junk debt buyers. I am not saying it would be easy, but it's doable, invite junk debt buyers to bid on loans at a competitive auction. So like you $50 dollars defaults you can put it up for sale if you so want and have people bid on it. I am not 100% confident they can beat banks, but I know a sure way that they won't beat them. Which is by making prosper loans at higher interest rates than bank loans for prime borrowers. There is no way they can beat banks doing that. The interest rate HAS to be lower or they can't compete, and the reason it's higher is because of the 3% origination fee and like 1% fee added on top of that when they service the loan. They want 4% just for creating a platform and having 0 credit risk. When banks give out 3-4% car loans and have credit risk. That's not competitive.
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Topic: What is it like to work at Prosper? I think we just found out. (Read 5165 times)