Apr 22 2008
Tips
If you are going to invest in Prosper.com, ask yourself what the motivation is for borrowers to repay their loan.
- Collateral? No. Borrowers won’t lose anything.
- Improve credit score? For some, but AA, A, and B credit scores have defaulted on loans. How can you tell the good from the bad?
- Collections will harass them? For some people yes, but not all. In fact, some states protect deadbeat borrowers. Read “Prosper - unsafe at any speed.”
Despite these cautions, you still may want to try Prosper.com. If so, you may want to review the following tips. This is what I’ve learned over my 2 years of Prosper lending.
Do Not Tips
- Do not read borrower stories
- Do not ask questions of borrowers
- Do not read the Prosper forums (their moderated and very filtered)
- Do not bid on loans manually
- Do not use think that Prosper is a great investment opportunity
- Do not check your performance more than monthly
- Do not use Prosper until they make some change
.
Do Tips
- Do use Portfolio Plans
- Do bid on only loans with a rate of return of 15% or more
- Do find the criteria that will find borrowers with an excellent repayment history
- Do expect lates and defaults
- Do understand this is a high risk and potentially low return investment
- Do take your money elsewhere if you are seeking a good investment opportunity
- Do invest in Prosper if you wish to donate to people who are bad money managers and the occasional thief
- Do consider other P2P Lending options
- Do use the two methods listed below
.
Method 1: Use portfolio plans; don’t manually bid on loans.
Method 2: Find a set of criteria that shows excellent borrower past behavior and only bid on those loans that meet those criteria.
Even with these two methods, the current state at Prosper.com is not bright. For now, I’ve stopped prospering at Prosper.com.
Do you have other tips you can suggest?
