Has anyone tried lending on prosper?

Question

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?

Chris Martin · Answer

This is typical of the prosper.com lender experience. See also http://www.prospers.org/wiki/Main_Page and the forums there for way too much to read.

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.

See also http://www.biggerpockets.com/forums/69/topics/57917-short-term-micro-loans.

Joshua Dorkin · Answer

Hey Warren - Would you mind sharing the kinds of loans that you focus on?

Warren Foster · Answer

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.)

Brandon H. · Answer

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.

J Scott · Answer

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...

Kyle Meyers · Answer

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.

Chris Martin · Answer

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.

Chris C. · Answer

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.

Dustin Gott · Answer

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.

Bryan Hancock · Answer

That seems like a lot of effort and risk to me for just north of 10%.

Has anyone tried lending on prosper?

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