Prosper.com Time for Another Loan

I know I said I’d be back with a Prosper update in about a month once I received enough in payments to fund a new loan. Well, here I am 11 days later with enough cash to bid again thanks to some of my debtors paying down large chunks of their loan early (including an E rated borrower from my wild west days who has fully paid their loan – thank you SeattleEditor). I’m also happy to report that all of my other loans (22) are current except one I had written off months ago.

So, let’s take a look at the market and see what we can see:

  1. Perfect Credit, 2nd Propser Loan, Current Prosper Lender – This is a no-brainer. Hands down, if you are a low risk lender, then this loan is for you. The borrower has no delinquencies, no public records, 0% credit utilization, no revolving credit balance, and a perfect record of payments on a previous Prosper loan. But, I’m not bidding. Why? 2 reasons. First, this loan is already fully funded and has almost 3 days left to get its already low rate (11%) bid down even lower. Second, the borrower paid off the first loan after only 8 payments. I emailed to see how long he planned to keep this one, and he admitted it was another short-term loan for while he relocates. This is an issue because I prefer loans that go the full 36 months in order to maximize my interest gains. So, I pass.
  2. debt consolidation – I chose this loan because sometimes all you need to see are the numbers. This borrower chose to provide no information about the way the loan would be used or any information about who they are. The most I can tell you is their username is jsmith1450, they live in Florida, and claim to be a long-term employee of the construction industry with a high income. They’re also offering a set rate on this loan at 15.55%. Given the visible credit history, this looks like a solid bet. And, I thought about it. The answer is no. Prosper is a peer to peer lending site. Part of the reason I like peer to peer lending is I get to know where the borrower is going to use the money (or at least where they say they are going to use it). So, if when looking at Bob’s Kiddie Porn loan and Mark’s Meth Lab loan all things are equal, I can then decide who’s getting my bid. Sorry guys, I’m putting my money on Susan’s Seal Clubbing Trip to Alaska.
  3. Wedding Costs – Here’s our winner. A blend of risk and reliability. A C credit grade but a high salary, no delinquencies, and a new wife to keep him in line 🙂 The 7 on time payments for the other Prosper loan don’t hurt either. This loan has been bid down from 29.68% to 21.25%. My bid is in at 19.47%. With 3 days left, I may get bid out of the loan. That’s OK. I’m not totally in love with it. There’s plenty of fish in the sea.

This is my second review of my Prosper loan choices and both times now I’ve chosen someone with a prior Prosper loan as my winner. I don’t want to get sucked too far down this road, but I have to think it’s probably going to be a good predictor of default rate in the future.

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