sourceninja
Diamond Member
- Mar 8, 2005
- 8,805
- 65
- 91
I'm guessing that many people's money make up the loan for 1 person. So Doboji's 200 dollars went to 4 different people, but of those 4 different people they also probably got money from 100+ other people. So if I requested a loan for $2,000 then it could possibly be funded by 40 different people that have put up 50 dollars each.
I'm confused by the premise of the site.
Am I correct in that the only reason you'd really want to *borrow* from this site is because you can't get a bank to loan you the $?
I don't see the upside to either the borrower or the lender...
For the borrower, maybe it is useful if you have really bad or no credit - in which case your loan doesn't seem likely to be funded, or you will be paying such a horrific interest rate that you probably won't do yourself any favors. The "personal risk" of borrowing from this site appears to be the same as borrowing from a bank, IE they will send you to collections and trash your credit...
For the lender, you will be getting a decent return rate, but at such a high risk of default that it does not seem worthwhile. Certainly you would have to fund dozens if not hundreds of loans to reduce this risk...
Am I correct in that the only reason you'd really want to *borrow* from this site is because you can't get a bank to loan you the $?
I don't see the upside to either the borrower or the lender...
For the borrower, maybe it is useful if you have really bad or no credit - in which case your loan doesn't seem likely to be funded, or you will be paying such a horrific interest rate that you probably won't do yourself any favors. The "personal risk" of borrowing from this site appears to be the same as borrowing from a bank, IE they will send you to collections and trash your credit...
For the lender, you will be getting a decent return rate, but at such a high risk of default that it does not seem worthwhile. Certainly you would have to fund dozens if not hundreds of loans to reduce this risk...
to the OP ..what made you decide to dabble on prosper?
i mean im sure you measured the risk vs reward..what made you decide one way or the other?
i mean im sure you measured the risk vs reward..what made you decide one way or the other?
Yes, I imagine it to be best for
"Does not seem" really is the key as you have to do the actual calculation to know if it's worth it...
Speaking of calculations, where is your math that shows it would take "dozens" or "hundreds" of loans to reduce the risk? ...and what measure of risk are you using?
Some notes:
In order to make the full, stated APY, you need to see enough cashflow in loan repayments each month to reinvest. Because the minimum amount you can invest in each loan is $50, loans are paid back over 36 months, interest is compounded monthly, and supposing a stated APY of 10% across all your loans, the minimum amount you'd need for this is about $1800, as found through:
Min = ($50 * 36) / (1 + APYs)^(1/12))
For any amount less than that, the rate you will see depends on how much you have in. This can be found through:
(1 + (APYs * P * (1+APYs)^(1/12) / $50 / 36))^($50 * 36 / P / (1+APYs)^(1/12)
In order to make the full, stated APY, you need to see enough cashflow in loan repayments each month to reinvest. Because the minimum amount you can invest in each loan is $50, loans are paid back over 36 months, interest is compounded monthly, and supposing a stated APY of 10% across all your loans, the minimum amount you'd need for this is about $1800, as found through:
Min = ($50 * 36) / (1 + APYs)^(1/12))
For any amount less than that, the rate you will see depends on how much you have in. This can be found through:
(1 + (APYs * P * (1+APYs)^(1/12) / $50 / 36))^($50 * 36 / P / (1+APYs)^(1/12)
It was brought up a while ago, I hopped on the "I'll see how it goes" bandwagon.
It does seem to just be somewhere for lenders to try and make some money, as borrowing from there will just give you some nice repayments you have to make, and I suppose one has to wonder, these people obviously can't get loans from any banks, so why is that exactly? Ah, because they're considered risky.
I guess it's all really:
1. Borrow money at x%
2. Lend borrowed money at y%
3. Confirm x < y
4. ...
5. Profit
5a. Go to 1.
It does seem to just be somewhere for lenders to try and make some money, as borrowing from there will just give you some nice repayments you have to make, and I suppose one has to wonder, these people obviously can't get loans from any banks, so why is that exactly? Ah, because they're considered risky.
I guess it's all really:
1. Borrow money at x%
2. Lend borrowed money at y%
3. Confirm x < y
4. ...
5. Profit
5a. Go to 1.
cKGunslinger
Lifer
- Nov 29, 1999
- 16,408
- 57
- 91
I looked into it a few months ago, from both angles. I don't think it's *too* risky, as long as you are careful, just like with all financial transactions. If we started a group, I'd be willing to invest some $$.
I'd try it. But I make a lot more money investing in realestate.
I can get loans at about 7% though and just reloan that money out. If I have any extra I might give it a try some day.
However I see potential for huge collapse here. I see everyone getting loans from them and then loaning out the money on there again to someone else for a few percentage higher. Then some bottom people cant make some payments and the whole thing collapses from the bottom up. Just one big pyramid.
I can get loans at about 7% though and just reloan that money out. If I have any extra I might give it a try some day.
However I see potential for huge collapse here. I see everyone getting loans from them and then loaning out the money on there again to someone else for a few percentage higher. Then some bottom people cant make some payments and the whole thing collapses from the bottom up. Just one big pyramid.
newParadigm
Diamond Member
- Jul 30, 2003
- 3,667
- 1
- 0
That sounds like a pyramid schem to me. (note Im not saying that the site encourages Pyramid, just that tk109's opinion was pyramid.)
Hmmm....but that assumes that everyone along the chain has no other money to pay back their own loan with...
...or that those who do have other money just don't care about their credit score
cKGunslinger
Lifer
- Nov 29, 1999
- 16,408
- 57
- 91
No, I'm sure no one here who put their own hard-earned money into it *ever* considered the possibility that the site might not be the up and up. No sir, they probably just dish out money to whoever asks for it.
Heck, maybe you should ask for some money in this thread and I'm sure those same suckers will probably PM you their bank account info and a scanned copy of thier signature.
I get this message when I log in:
Contacted customer support for the last five days and have heard nothing from them
Contacted customer support for the last five days and have heard nothing from them
Thanks to the OP for this thread. I bookmarked it back when it was created. Couldn't sleep last night {headache} and was browsing through my bookmarks and found the prosper link. Signe up and applied today for a $3000 loan. Got $900 funded in the first 10 minutes, and I have no doubt the rest will be funded soon. It's an awesome prospect that seems to have a great chance of working. I look forward to the point when I'm able to lend.
FelixDeCat
Lifer
- Aug 4, 2000
- 31,035
- 2,688
- 126
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