Review Snapshot

For borrowers a great way to skirt the banking system. For lenders an average of over 10% ROI.


A few investors in the forums griped about disappointing results.


A win/win solution with relatively low risk!

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Casey Dalton : I write reviews of products I deem worthy of review. Generally if I'm reviewing...Member Reputation 335 • 69 active Krits from
Prospercom Is This Person To Person Lending Service For You
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Prosper Review - Is this Person to Person Lending Service for You?

If you've landed on this page, I'm guessing you're in one of two positions: Either you're looking for a loan or you're looking to make an investment. 

Let's start with borrowers.

If you're looking for a loan, chance are you fall into one of these major categories:

1. You're running or starting a small business.

2.  You're interested in paying down credit card debt without the insane interest rates!

3. You're looking to make home improvements. 

4. You have a strong credit rating but not much credit history.

Of course there are lots of other great reasons people are looking for loans outside the banking system these days, those just happen to be among the most popular.

What makes Prosper Work?

For starters, prosper is the world's largest peer to peer lending marketplace, with over 1,220,000 members and $295,000,000 funded loans. Taking advantage of the  long tail economy as well as disillusionment with our broken and bureaucratic banking system, prosper enables borrowers to list loan requests from between $2,000 to $25,000 while individual lenders are free to invest as little as $25.00. 

Prosper is as highly regulated as a bank but without the need for insurance because there is no systemic risk. The lenders take the hit should a borrower default on a loan. That's why borrowers are subject to a screening process Prosper oversees, to ensure their credit rating is decent. If a borrower's credit rating isn't great they may still be able to request a loan but they will be subject to higher interest rates. 

Why Prosper for Your Loan?

Prosper engenders a warm fuzzy when you pit it against the banking system. The idea that a community can come together and successfully meet each other's needs is personally empowering. It's not only smart, it is one of those rare businesses whose model is win/win.

There is also more of a sense of personal accountability in this environment. If you default, it isn't to a faceless, cold institution but to a peer or more likely a group of peers. The theory goes that this personal element will make most borrowers more accountable for paying back their loans.

And so far the theory has proven out.'s popularity increased by an insane 370% back in it's 6th year in business and it continues to grow by leaps and bounds. With the average loan running $6500 and the average roi above 10%, clearly the system is working for all involved. 

To check out Prosper as a borrower CLICK HERE.

Prosper was founded by some financial and tech luminaries which might also explain it's success.  Co-founded by Chris Larsen who was the co-founder of E-LOAN, prosper is backed by people like Capital One co-founder Nigel Morris. As if it wasn't already imminently clear, this puppy has legs!

So what's in it for the investor?

As mentioned, investors, on average, are seeing an ROI of over 10% and choosing to do something unique with their money in the process. But don't let my touchy feely sensibility fool you. There are now some major players in the mix. Institutions  are now recognizing this marketplace as an environment for steady returns so they have stepped in to capitalize on the opportunity. Will this competition hurt the smaller investors? Not likely! There are plenty of borrowers to go around. 

What's the Dirt?

Doing due diligence in the forums I noticed that while Prosper was consistently discussed favorably from the borrower's pov, lenders had some gripes. A couple were disappointed with their results and took their investing dollars elsewhere. It's a reminder that there is always risk. One great way to address that issue is to diversify your loan portfolio. Chances are someone will default so if you spread your lending dollars you are more likely to offset this inevitability. 

To check out Prosper as a lender or borrower, click on GO!

Date Reviewed: January 26, 2012, 9:54 pm
Reviewed by Casey Dalton
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Reviewer has never tested this product, all content in this review is purely based on speculation and should be treated as entertainment only.

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