Real Estate Agent · Tampa, FL · Member since 2009 · 456 posts · 123 votes
Has anyone tried lending on prosper . com? Good/Bad experiences? Does anyone know what happens if the borrowers don't pay ie what steps do they take, or do you have to take, to attempt to sue or place a judgment against the borrowers, or whatever needs to be done to try to reclaim your lent principal?
I was a prosper.com lender until the NC DOJ instituted a cease and desist order that mirrored the federal order (see http://www.sec.gov/litigation/admin/2008/33-8984.pdf) They now meet SEC requirements, but the NC order is still in place. I have not been able to lend for a long time. Don't know if I will again. One data point: all your lending activity is public data via the SEC. See http://www.ericscc.com/search and enter your screen name to see how you rank. Historically, first year lenders have better performance... then the defaults catch up. That's the historical trend. Also: http://www.lendstats.com/... middle of screen under Performance Summary for ROI. Click on any of the links (e.g. "Since 07/09") to get statistics for virtually any loan by about any parameter you want.
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
15y
I've done some Prosper lending, and basically broke even over two years of making loans (I don't do it anymore).
It seems that many A-credit borrowers suddenly decide to stop paying when it's a Prosper loan, and the recourse that the site takes isn't very useful (though I don't remember exactly what they do).
All in all, I wasn't thrilled with the experience, but that may have been due to my poor investment decisions...
I found much better results with LendingClub. Which ever site you use, the key is to spread your risk among as many notes as possible. My average note is less than $30, and my returns are just slightly better than the historical returns they advertise.
Residential Landlord · Indianapolis, IN · Member since 2010 · 592 posts · 138 votes
15y
I have invested on Prosper, I bought 38 notes a little over a year ago. 3 have been paid off. 8 have not paid in several months, 2 are a little over due right now and 25 are paying as they are supposed to. Even with the notes that have been charged off, I have been happy with the returns, I bought only the highest return notes so I knew there was a lot of risk going in. I have not yet seen any of the charged off notes be sold, it looks like the site has not done that since 2007. I have not continued to buy notes because I moved to Indiana and they do not allow Indiana residents to buy notes on the site.
Real Estate Investor · Abu Dhabi, UAE · Member since 2010 · 48 posts · 16 votes
15y
I can't speak for Prosper, but I have been very satisfied with LC. Been investing a little over a year with 3,000+ loans current and averaging 10-11% returns. I have the found that my default rate is almost identical to the historical rates. I do invest in a fairly narrow range of loan types which has greatly decreased my defaults compared to when I let the site "pick" my loans for me (before i knew better.)
I was a prosper.com lender until the NC DOJ instituted a cease and desist order that mirrored the federal order (see http://www.sec.gov/litigation/admin/2008/33-8984.pdf) They now meet SEC requirements, but the NC order is still in place. I have not been able to lend for a long time. Don't know if I will again. One data point: all your lending activity is public data via the SEC. See http://www.ericscc.com/search and enter your screen name to see how you rank. Historically, first year lenders have better performance... then the defaults catch up. That's the historical trend. Also: http://www.lendstats.com/... middle of screen under Performance Summary for ROI. Click on any of the links (e.g. "Since 07/09") to get statistics for virtually any loan by about any parameter you want.
Investor · Aurora, CO · Member since 2009 · 200 posts · 74 votes
15y
In my micro sample, I have lent to two business loans on prosper and have had both paid on time for the last 18 months. I disagree with diversification. While I obviously only hobby lend, I would rather lend $1000 dollars and minimize my time involved then spend hours and hours lending $50 at a time.
I too would be interested in your approach Warren.
Real Estate Investor · Abu Dhabi, UAE · Member since 2010 · 48 posts · 16 votes
15y
Josh,
Sorry for the delay,
I have found my sweet spot investing in 60 month D, E, and F loans, 20k and under. These tend to have the highest return/default ratio and from experience, most of my defaults initially were from those that "maxed" out their loans, thus the 20k maximum. My NET annualized return as of today is 10.27% so I am not complaining.
If you have any questions, I would be happy to answer, at least based on my experience with them over the last year and a half.
Involved In Real Estate · St. Paul, MN · Member since 2010 · 65 posts · 15 votes
15y
I have had good success with Prosper. Like anything it is about information and execution. Having a defined plan of what you are looking for then sticking to that plan is key. I have owned over 50 loans for most of the last 3 years and have averaged around a 25% return every year. I have read many negative reviews but have not found them to be the case in my experiences.
Wholesaler · Easley, SC · Member since 2010 · 340 posts · 249 votes
15y
I too have been investing in Prosper since about 6 months after they went public. The first several years I broke even but I now get about 13%. It is also in my opinion a great place to save money in AA rated loans. 5-6% return with your money spread across numerous loans. Bets a CD or Money Market in my opinion.
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
15y
I think a lot of people, myself included, have concluded that unsecured lending like prosper offers is not the best way for a lender to go. Unfortunately, there are a lot of "good bets" out there (that may be you) that will never get a lender's dime because of the ease of default. Unsecured means there isn't anything to go after, and I'm not going to do that kind of lending for a long time... if ever again.