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Lend Money & Borrow Money

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Having been a member of Prosper.com for about 16 months now, I decided to give a round-up of what I've learned. I'm going to break this up into three areas:

  • The Reason to Borrow Money - If you have credit card debt that you are trying to pay off, you might be able to borrow money at a lower interest rate at Prosper.com. This is what Tricia from Blogging Away Debt found. Instead of paying 13% to a faceless credit card company, she's now paying 9.9% to a bunch of average people. If you are looking to reduce your credit card rate, borrowing money from Prosper might be a smart idea.
  • The Reason to Lend Money - Remember that 9.9% that Tricia is paying above? That's nearly double what you can get in a high-interest savings account. Indeed there is risk, I'm the poster child for that. I didn't properly analyze risk when I started. However, in looking at my new strategy over the last six months, I've had only two late loans (out of around 50). This could go up over time, but it's still very positive. I have also made 40+ loans to people with credit grades AA, A, and B and none of them are late! I'm making 18-19% on average on those loans. Lending money to credit grade D and E have not been successful for me. If you avoid that (something that I'm starting to do now), I think Prosper can be a great investment. If this sounds interesting to you, join Prosper through this link - you'll get $25 to start and I'll get $25 for referring you. If it's helpful, I've written about some of my lending strategies in the past.
  • The Case for the Little Man - As I mentioned above, banks and credit card companies love to charge high interest rates. The executives at those companies live like kings. A bank's business is largely to give a small amount of interest to you while they lend it to other people at large interest rates. Credit card companies lend you money for free in hopes that you can't pay them back right away, leading to high interest rates. Prosper allows you to be the banker and get some of those high interest rates for yourself. Don't be fooled, Prosper takes their cut, but it's far less than the bank's cut. They can do this because they've automated the lending system. You do a lot of the bankers' work and reap their rewards, but they provide the platform. The other side of the coin is that you are lending to individuals and small companies. You are not putting your money to work for those big company executives to buy themselves $600 toilet seats. You are helping someone get out of a debt hole or start a new company.

I think the time is right to join Prosper. There are tools for lenders to create and refine great strategies. The market place can only help borrowers - as Tricia found. So give it a shot and join Prosper today.

Last updated on November 5, 2011.

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21 Responses to “Lend Money & Borrow Money”

  1. Lazy,

    I might have to try this when I get a little time. I have a little ‘investment’ cash sitting in ING that would be perfect to try this out.

    Does prosper lend to countries like Africa, or is it just US?
    – The Happy Rock

  2. HMG says:

    Just wondering if you use the automated screens that they provide, or if you bid on loans yourself by browsing the listings? I am using a couple of customized screens and have also been on Prosper since they started. I have had a couple of loans default and a few others are late. I didn’t have screens set up at the start but quickly created 2 screens (high rate and high credit rating screen, and no delinquicies, low accounts, low credit score screen). it will be interesting to see how they perform over time.

  3. Lazy Man says:

    It’s just the US for now. I’ve heard them mention they’d like to expand to other countries, but I imagine the regulatory hurdles are high. Kiva.org allows you to lend to 3rd world countries, but it’s more of a charity service. You don’t make interest, but you improve people’s lives.

  4. Lazy Man says:

    I do take advantage of standing orders almost exclusively now. I detailed some of my strategies in the past. Thanks for reminding me HMG, I’ve included that link in the article.

  5. Anyway we can lend money if we are Canadian? I read on the website that you must be US citizens. Do you know any website like prosper but for Canadian citizens?

  6. Hello. Is there any early-call option or resale option or do we simply wait years to full maturity? Thank you.

  7. bryan says:

    I watched your blog in DebtCC Blog Hunt and got to know about Prosper from your site.Thanks to both you and prosper.

  8. dudeasincool says:

    Hi, Lazyman, I just joined through your link above, but did not receive the $25 credit you mentioned. Have I missed a step?

  9. Dan at Everydayfinance says:

    Love to see the continued Prosper discussion. I love the system and I’m at 13% with no defaults after several months. I’ve also posted a few strategies, groups, etc to help people along. The naysayers were wrong, the prosper commmunity is prospering indeed as evidenced by their continued growth.


  10. ByteLoans says:

    I have started doing this as well for about a year. Same goals, just a little behind this guy. Experiences are right on. And if you are careful in the advanced searches, you too can hold a 97% current payments status as well. See what is going on with my plans at www . houseofdenning . com .

  11. Tom says:

    I just got the email from Prosper about the top referrers and I see you are #3. Well done! Are you making more money from referrals or interest on your prosper loans?

  12. dudeasincool:
    The $25 bonus is paid when you win your first loan. So, the steps you might be enter a bank account, verify a bank account, transfer $50 (or more), bid on listings until you fund a $50 loan. Then the $25 is paid instantly.

  13. Kells Valencia says:

    We offer loan to people,groups and companies with very low interest rate.We are a private financial company.Do you need a loan?Then contact us nowWe offer all kinds of loans ranging from personal to business and real estate loans.Our loan service is fast,easy and you have a very large duration to make repayment.If interested and seriousminded about the loan,contact us now

  14. […] Borrow Money & Lend Money at Prosper […]

  15. […] Lazy Man at Lazy Man and Money shares his experience with Prosper.com with a review on how to lend and borrow money. No doubt that there are stories of prosperity, but personally, I don’t feel it’s right […]

  16. Joe Wiele says:

    I can lend you money upto a year. The least is $200k

  17. kurt says:

    would like to talk to Joe Wiele

  18. Cindy says:

    This sounds a little too good to be true but I am hopeful. Looking for a Legal, Ethical way to borrow 25,000.00 for 18 months. I am willing to use the house as equity. I need the money by 8/15/09. Any ideas???? Please????

  19. Wanda says:

    The idea of this website is great. Unfortunately, I do not qualify. I’ve made some really bad decisions in my life and I will admit that. I got married over three years ago, we had another child and things were going great. We moved out of out of our tiny two-bedroom apartment into to house we were hoping to buy. So what happened? The ecomony took and turn for the worse and we were hit hard. We’ve let go of things that aren’t a necessity but it doesn’t seem enough. I know I’m not the only one in this situation. I have kids and the thought of being homeless and without electricity and gas is beyond belief. I don’t want a hand out, just a chance to get back on my (well, our…my husband included) feet.

  20. […] the opportunity to make our credit scoring system more accurate. That will only help people with money to lend figure out who is a good credit risk. We'll only find out if we open up the FICBB or develop […]

  21. Janis says:

    I tried prosper and they turned me down. I have a really good job, but my credit is bad
    I was looking to get a loan to pay off medical bills and taxes and guess what I got scammed now I am in real financial need.

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