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One Year On Prosper


With banks paying virtually nothing in interest on small accounts, I turned to Prosper.com last year to possibly increase my rate of return.  It’s time to see how the initial loans that I made are doing one full year later.

Out of 11 loans, 5 are just about one year old.  In the interest of fairness, we will look at just those five.  I loaned $25  to each of the 5 borrowers for a total of $125, with an unweighted average interest rate of 9.12%.   I have received a total of $48.48 in principal and interest from these loans. Instead of writing this all down, why not review it all in chart form?


My Prosper loans aren’t doing so bad, but if you look closely, you’ll see that one row is in red.  That’s because that loan is currently 15 days past due.  All other loans are current.  Even through the other loans are performing well, if loan #3 defaults, it has the ability to wipe out just about all of the gains that I will make on the other four loans.

Personal loan, debt consolidation, refinancing - One Year On Prosper

If you remember, I wrote a post entitled,Finance 101: What the Heck is Peer-to-Peer or P2P Lending? just over a year ago.  In my post, I urged you to not invest more than you were willing to lose.  So, if Borrow #3 defaults, I will be okay.  Also notice that I spread my money around.  I almost never invest more than $25 with any one borrower, and invest only with borrowers rate “A” or “AA” with no previous collections to reduce the risk of default.  I have 6 loans in addition to the loans that I have listed above.  Of those 6,  one is also 15 days behind. Should this person default, he will definitely affect my return, but he won’t wipe it out completely.  One person has paid off their loan only 5 months after origination, which netted me $1.57 in interest.  That return is actually much, much higher than ING or any local bank would have paid out in the same time frame.

So, how’s Prosper doing?  Well, I’m doing better than most individuals that I know, but it’s not perfect.  I have made some money, but with payment terms of three years, there is a substantial risk that more borrowers will default.  Again, I have only invested money that I was willing to lose.

I still think that peer-to-peer lenders as a whole will be major competitors for banks when it comes to micro finance and small individuals loans.  Small businesses are also finding it difficult to obtain loans, even with decent cash flow and a winning business plan.  Getting a small business loan with bad credit is nearly impossible, but the peer-to-peer lending institutions have the potential to dominate this market and help drive an economic recovery.   And if you and I can make some money in the process, why not?

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16 thoughts on “One Year On Prosper

    • I sure do! I can refer the loan to a collection agency, but considering that I would have to pay them a fee or sell the loan for probably about half the outstanding value, I’m not counting that as a very viable option based on the amount of money that we’re talking about.

    • I sure do! I can refer the loan to a collection agency, but considering that I would have to pay them a fee or sell the loan for probably about half the outstanding value, I’m not counting that as a very viable option based on the amount of money that we’re talking about.

  • I loved my prosper account. I found it fun to invest in a ton of loans at $25 a piece. But I was told by Employer I couldn’t participate in it (FINRA stuff).

    Don’t you have CC Debt? Why mess around with a $100 account?

    • I have LOTS of credit card debt, and I have about $400 invested in Prosper, but I did stop funding loans a few months ago to concentrate on the debt. You’re right. I was pulled in too many directions but now I’m FOCUSED!

  • I loved my prosper account. I found it fun to invest in a ton of loans at $25 a piece. But I was told by Employer I couldn’t participate in it (FINRA stuff).

    Don’t you have CC Debt? Why mess around with a $100 account?

    • I have LOTS of credit card debt, and I have about $400 invested in Prosper, but I did stop funding loans a few months ago to concentrate on the debt. You’re right. I was pulled in too many directions but now I’m FOCUSED!

  • Hey Sandy, Looks like you have pretty good results here!

    I invested about $500 before they shut down and restarted things. I chose a wide sampling of borrowers as an experiment and it turned out pretty bad. Almost all defaulted including those with great credit. I wonder if your better results have a lot to do with their redesign and perhaps higher standards.

    • I did the opposite as you. I was extremely picky with those I chose and about half of my borrowers was before the shutdown and “quiet period” required by the SEC. The problem is that their own criteria and metrics were off, so I developed my own. It was basically this:

      1) AA borrowers only
      2) 10 on Prosper Score
      3) Home owner
      4) Nothing home improvements or making large purchases such as a car
      5) Debt reduction only where the person seemed to be refinancing a higher rate debt for a lower one
      6) Must have sufficient (you determine) expendable income over and above debt repayments
      7) Credit score above 750
      8.) No history of liens, judgments or defaults
      9) Stable employment, meaning that they weer with employer for at least 5 years.
      10) No self employed

      I was really restrictive and it worked out pretty well for me. I know many people that were KILLED. Loan #3 is now 16 days behind, but the other loan is caught up now. So out of 12 notes, one looks like it will default, one has been paid off, and the others are current. Not too shabby.

  • Hey Sandy, Looks like you have pretty good results here!

    I invested about $500 before they shut down and restarted things. I chose a wide sampling of borrowers as an experiment and it turned out pretty bad. Almost all defaulted including those with great credit. I wonder if your better results have a lot to do with their redesign and perhaps higher standards.

    • I did the opposite as you. I was extremely picky with those I chose and about half of my borrowers was before the shutdown and “quiet period” required by the SEC. The problem is that their own criteria and metrics were off, so I developed my own. It was basically this:

      1) AA borrowers only
      2) 10 on Prosper Score
      3) Home owner
      4) Nothing home improvements or making large purchases such as a car
      5) Debt reduction only where the person seemed to be refinancing a higher rate debt for a lower one
      6) Must have sufficient (you determine) expendable income over and above debt repayments
      7) Credit score above 750
      8.) No history of liens, judgments or defaults
      9) Stable employment, meaning that they weer with employer for at least 5 years.
      10) No self employed

      I was really restrictive and it worked out pretty well for me. I know many people that were KILLED. Loan #3 is now 16 days behind, but the other loan is caught up now. So out of 12 notes, one looks like it will default, one has been paid off, and the others are current. Not too shabby.

  • Someone also told me about prosper.com and I am glad I am reading your experiences here. Now I have a little more understanding I believe it is something I will stay away from.

  • Someone also told me about prosper.com and I am glad I am reading your experiences here. Now I have a little more understanding I believe it is something I will stay away from.

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