Prosper Update
I started lending money on Prosper.com about 10 months ago. I started out with a total of $1900 in my account. I’ve been mainly targeting people with D and E credit who seem have steady jobs but got into the payday loan trap and can’t get out. My average interest rate is about 19.4% right now and I usually lend out the minimum $50.
I’ve been reinvesting all the interest payments I’ve received. So far I’ve made loans to 40 people and I’ve had 2 defaults and 1 currently late loan – two of which were from Prosper’s auto-pay, which I don’t really recommend using. One of the defaults had a B rating!
Currently my account is worth about $2106, which gives me an annualized return of about 13%. Not bad at all.
If I don’t have any more defaults, this might increase slightly. Even if I get 1 more default, I should still get an annualized rate of 9%, which is about twice what I get in a savings account.
Why should Visa and Mastercard make all the money!
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August 24th, 2007 at 11:45 am
I’d be really careful with the D and E loans. They look great at first, but after a few months, they often go south. Look at Prosper’s performance chart over the last year and E loans LOST nearly 8% over the last year. AA,A, and B seem to make 9-10%. With a little caution on the those higher grades, I think you have a better shot at getting 13%.
August 27th, 2007 at 8:43 am
I’m glad to see someone else’s experience with Prosper. I’ve been a lender on there for a year and a half now, and I’ve had similiar experiences.
At first I lent mostly to D, E, and even a few NC’s. Since then I’ve added lots of C’s and even a couple of A’s and B’s. My average interest rate is 23% now, and so far I’ve had two loans default and 2 others that are currently in collections.
Assuming the two loans in collections default, my annualized return will be just over 5%–right at what I would have gotten in a money market. However, I have been reinvesting in better quality loans, and I haven’t had one go to collections in quite awhile. So every month that goes by without a default, my annualized return increases.
Assuming all the loans in collections default,
September 1st, 2007 at 10:34 am
I have A-D with the top of my bell curve around C. I’m looking at about 16%, but with one default, I’ve dropped to about 14% for the year (pro-rated since I’ve only been in for 8 months.)
I’d be really careful reinvesting from here on out… folks at risk are going to pay their mortgages to keep their homes before paying back your money from Prosper. Prosper risk is so much higher now than it was 6 or 8 months ago.
Be careful out there.