http://www.finance-weblog.com/50226711/another_prospercom_experience.phpGuest blogger Troy Bryant has just jumped into the Prosper pool as a lender and relates his early experience below. I'm going to nab him 6 months from now and a year from now and see how he feels then. Should be interesting. If you have a Prosper.com experience to share, please do so in the comment area below. Now here's Troy...
When I came across Prosper last month I had to try it. For those that don't know, it's a person-to-person online lending network. Prosper borrowers seek a cash loan ($25K is the limit one can borrow). They get the cash from Prosper lenders, who bid on lending the borrower money-this bidding process knocks down the rate for the borrowers (better than what they could probably get from a bank or credit card).
I scraped together $200 bucks and started as a Prosper lender (my wife and I just had a baby so I'm sure we'll be Prosper borrowers soon enough). You can lend as little as $50 bucks to a person, so I split the $200 into four different loans. I figured that would be less risky than having money riding on just one loan. For borrowers, that means they'll potentially have hundreds of lenders providing the funds for one large loan. Every loan is a three-year loan, but a borrower can pay it off early.
I divided my $200 into four $50 loans...and then I used Prosper's "Portfolio Plan" to pick loans to automatically bid on. There's four different Portfolio Plans: Conservative, Balanced, Moderate and Aggressive. The difference is that the more aggressive plan gives a higher return to the lender. But on the flip side, the loans are to borrowers that have a worse credit grade (borrowers are rated as an AA-E grade on credit) or a larger debt to income ratio. I stuck with a moderate plan.
-----------------
And a note at the end of the blog (Ira, you listening?): So far so good for Troy. We'll see if it holds up. Again, if you have a longer-term Prosper.com experience, feel free to relate it below.