

Prosper is Back - bdr
http://blog.prosper.com/2009/07/13/welcome-back-lenders/

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microtherion
Prosper indeed is technically neat in some aspects. However, default rates for
most lenders are sky high: According to outside estimates, 9 of the top 10
investors on Prosper will end up with a negative ROI, despite lending at
double digit interest rates: <http://www.ericscc.com/tools/prosper-lender-
list>

Before investing a sizeable amount, consult external sites and/or observe a
smallish portfolio for 6 months or so.

~~~
noodle
the issue there is that you're looking at people with huge lump sums who
spread their money around as much as possible. if you just throw your money
around equally at everyone, you'll probably not come out in the black.

if you invest in a more targetted, calculated way, you'll be _more likely_ to
come out with a good return. there are plenty of accounts with 10%+ estimated
ROI on that list. take a look at how they invest, there are some trends.

disclaimer: i've not invested any money in prosper, but i was considering
trying it out right before they shut their doors. i've done some homework on
it.

~~~
microtherion
The top 10 I mentioned had a wide variability of strategies, and I can assure
you that they all thought they had a plan.

If you only look at lenders with a sufficiently large (20 loans) and aged (365
days) portfolio to make an evaluation plausible, only 167 lenders of more than
19000 lenders in that category had an estimated ROI of >10%.

Of the 1161 lenders with more than $10K invested and a portfolio older than
365 days, exactly _3_ had an estimated ROI of >10%.

The <http://prospers.org> discussion boards are full of guys who've done their
homework. The test is how their loans fared, and generally they haven't fared
well.

disclaimer, which I should have stated above: I've invested $1K a few years
ago, and am more or less breaking even at the moment.

~~~
jacquesm
Since you are someone investing there, and investing normally being something
that you do carefully, how come everybody is falling over each other to park
their money there ?

You'd think they had a very positive track record wrt to ROI, but I only find
evidence to the contrary.

It's almost as if lenders are lining up and they have a hard time finding
people to borrow to, in 'the real world' you'd expect it the other way around.

~~~
microtherion
The stats I have seen would indicate that lender interest peaked around May
2008, and e.g. %age of listings funded decreased May-Sep:
<http://www.ericscc.com/stats/prosper-listing-volume>

Unfortunately, I have no good historical stats on interest rate paid by
borrowers, which would probably be the best metric for lender/borrower
interest.

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gruseom
That is a formidable barrier to entry.

~~~
encoderer
but lending club beat them to it... or am i misunderstanding?

~~~
gruseom
I was referring to SEC approval to do something unorthodox with securities
online. I'm ignorant of the space, so it's quite possible someone beat them to
it.

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seldo
Also in this space are LendingClub, who don't do auctions but have a similar
model of letting people buy portions of other people's loans. They claim an
effective APY of just under 10%; I've invested a (very small) sum with them as
an experiment and so far am on track to hit that APY (after 2 months).

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jakewolf
I took out a small loan with prosper 3 years ago and it's definitely a quick
and easy way to get cash if you have good credit.

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grandalf
fantastic! Just signed up.

