Prosper on Prosper? Thoughts on peer to peer lending...

Do you all know about this relatively new website, Prosper.com? It's a person to person loan operation. The loans are actually originated through Prosper (not you personally), but at lower interest rates than many credit card companies. I just created an account and am transferring a couple hundred dollars in. I'm really curious about it. You can see applicant's credit ratings, their specific request (ie, what they hope to do with the loan), and whatever other information they want to post. Prosper takes a .5% percent cut as their share, but then you get monthly payments as the person pays back their loan. The interesting (fun?) part of this gig is that, sorta like Ebay, you bid on people's loan. You can bid starting at $50. When the bidding is done, the lowest bid, on the interest rate the lender is willing to accept, based on the applicants credit rating, is the rate that's set for that loan.

Here's a bit more detail from Prosper.com: "Borrowers create loan listings for up to $25,000 and set the maximum rate they are willing to pay a lender. Then the auction begins as people who lend bid down the interest rate. Once the auction ends, Prosper takes the bids with the lowest rates and combines them into one simple loan. Prosper handles all on-going loan administration tasks including loan repayment and collections on behalf of the matched borrower and lenders."

I still like my IngDirect Account (4.3% interest) for stability, and the stock market for long term gains, but it seems like you might be able to get 12-15% returns (including some defaults), without too much difficulty on Prosper. I'll stick my toe in and let you know how it goes. Seems like it could be a way to help folks get a lower rate, and make some money yourself. I don't know if I'd ever use it, though...

Speaking of peer to peer lending, click on over to Kiva to check out something really remarkable. You can lend as little as $25 to help someone in Ghana, or Honduras, or wherever, start or expand their business. It's basically an interest free loan that will be repaid (about 98% percent are repaid, per microlending date), that you can then invest in someone else and their family or business. I'm planning to sink some money in this too, because you know what? The reality is that I've got everything I need in my life (except some good kitchen knifes!), and I can afford to 'share' a hundred bucks to do some good in the world. Go poke around. See what you think. Then chip in $25 to help someone create a better life for themselves and their family.