That will be my first and hopefully last Star Trek reference I make. I’m probably one of the few software engineers that haven’t spent any time watching it.
About 6 weeks ago, I took $100 and deposited it with a new website, Prosper. The website is often called the Ebay of loans. It basically matches up borrowers and lenders. It’s an idea that I came up with quite some time ago, but never did anything with it. I didn’t have the resources or connections to get it done right, and well, as this blog says, I’m lazy.
Let’s get back to the Prosper. A similar website has been successful in Europe for awhile. The site is backed by some pretty big sources, so I had no doubts about their legitimacy. They’ve done all the right things and provided lots of financial checks on the borrowers as well as providing collection agencies for the lenders.
For my first loan, I found someone looking for a loan at 12% interest. That’s about 3 times better than I can in my high interest bank account and 12 times better than a lot of savings accounts today. I presume this rate is better than what the person could have got from a bank or else he wouldn’t take it. Sure I’m taking a risk, but sometimes that what it takes if you want to make more than 4%. In the end, the borrower wins, the lender wins, and the bank misses out.