I got an e-mail yesterday from Prosper's CEO Chris Larsen. I wasn't alone, I'm sure that at least every lender got one. As Prosper gears up for it's first birthday, they've found the need to make a few changes. Here I will outline them and what they mean.
New Customer Service
Instead of outsourcing their customer support overseas, they'll bring the operation in-house. I've never needed customer service, but this is a big win for lenders and borrowers.
Friends and Endorsements
Members can recommend loans to other members. Unfortunately for me it seems like it's mostly about the borrowers. If they had something like this for lenders, the first thing I'm going to do is add Kevin from RateLadder.com to my friend list.
Additional Credit and Employment Data
Lenders get more data from borrowers. This is a huge plus for me. I'm very much a by-the-numbers kind of guy, so the more numbers the better.
Questions and Answers
Lenders can ask questions and get answers in a nice chat. I never looked into asking questions before. It seemed like a lot of work and went through e-mail. I don't need my e-mail all piled up with Prosper questions and answers.
There is a new estimated ROI (see bottom of page) section of the site. I used this tool to determine that I'm not going to do grade E loans anymore. They return a negative 8.43%. Yes that's -8.43%. It looks like C and D loans are possibly the best bets returning 9%+. Of course, if I can find loans with less risk or more return than average, it looks to be a good investment opportunity.
Credit Grade Changes
Anyone with a 520 or lower credit score will no longer be able to borrow at Prosper. I guess they consider them deadbeats. Such a very, very small percentage of those loans got funded that it's not worth it to Prosper. Grade HR and E will be in the range from 520-600.
This is the big hit for lenders. Instead of the 0.5% that Prosper earned before, it will jump to 1%. Prosper has always seemed like the Ebay of loans. With the fee increase, it seems they really are. On the borrower's side, I didn't follow those fees that much before, but E and HR will now pay a 2% fee to Prosper which seems like it might be higher than the past. It looks like this is going to pay for the customer support above. I'd personally rather not have the customer support if I had the choice.
Identity Theft Guarantee
Prosper will payback a loan in full if it's a case of stolen identity. I think that's noble, but it isn't one of my highest concerns.
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