An interesting way to make your savings dollars continue to grow is a website called Prosper. It brings lenders and borrowers together in a safe, fair and effective way to loan or borrow money. Fraud and credit checking for the lender and and the ability of the buyer to lower their rates by convincing bidders of their credit worthiness makes this social lender worthy of being called one of the most interesting investment sites on the web. Loans range from people wanting to payoff high rate credit cards,medical bills, home improvements, vacations, small business loans and nearly every other reason you can imagine.
It works like this:
The borrower creates a loan listing specifying the amount they want to borrow, the interest rate they are willing to pay and the reason for the loan. The website will do a fraud and credit check and the borrower will be assigned a credit value ranging from AA to E and HR (high risk).
Potential lenders bid on a portion of the loan (minimum of $50.00) with the interest rate they are willing to accept. Once the loan receives the number of bids necessary to fund the loan, extra bids may reduce the interest rate further. The website takes a small fee, reviews the loan one last time and then if everything looks good funds the loan. By spreading the risk over a number of loans the lender reduces the total risk and can effect a more reliable return on their investment. Loans are for a 3 year period and may be paid off early. Funds are deposited direct to the borrowers checking account and loan payment is transferred automatically once a month.
Now like any investment there is the potential for loss so it is up to you to do your due diligence and to take responsibility for your own decisions. I am not an investment adviser and I have written this article as an information and educational resource only. My personal experience so far has been excellent but your results might be different.
To date Prosper has funded over 79 million dollars in loans and has over 380,000 members.
Filed under: People Helping People
