Prosper.com

Today I read and article about Prosper.com and found it an interesting venture. Prosper.com is a website that facilitates person-to-person loans. You can register as either a lender or a borrower and Prosper.com will help link you up with the appropriate people.

There are some big risks if you are looking to invest with Prosper.com, so the article that I read suggested that it is wise to spread your investments out over many different borrows. Rather than loaning $1,000 to one person, it would be better to setup 5 different loans for $200 each.

Here are the very basics from Prosper.com:

Prosper, America’s first people-to-people lending marketplace, was created to make consumer lending more financially and socially rewarding for everyone.

The way Prosper works is intuitive to people who have used an online auction. Instead of listing and bidding on items, people list and bid on loans using Prosper’s online auction platform.

People who want to lend set the minimum interest rate they are willing to earn and bid in increments of $50 to $25,000 on loan listings they select. People who lend can easily diversify using “standing orders”, which automatically make many small loans to different borrowers.