Earn 7.75% on your investment of $50 to $9k

[JBinKC]

Re: Earn 7.75% on your investment of $50 to $9k

34-

So what you are saying is prosper.com holds a verifiable title to assets they pledge for the loan. I am curious what the percentage of assets they have to pledge. The way I see it is I might as well open a pawn shop where I can offer 5 cents on the dollar for a pledged asset and I can charge the maximum percentage allowed by law for interest for them to get it back.

[BTC]

Re: Earn 7.75% on your investment of $50 to $9k

Just curious, but what are the incentives for someone to pay higher interest rates to strangers when lower rates are available via more traditional routes? Seems like your customer base would more than likely be people who aren't able to secure traditional funding. If that's the case, I wouldn't be willing to let them borrow from me.

[34saving]

Re: Earn 7.75% on your investment of $50 to $9k

JBinKC - No. Prosper is very clear about these being unsecured loans. Sorry if my comments were misleading about that. They do report to credit agencies, deal with trying to recoup defaults, etc.

BTC - Let's say someone had a HELOC on his house (an 80-10-10 loan) or a HELOC for some other reason. Right now, even with his "AA" credit his bank would be charging 7.5% and that rate will probably climb a bit more before the fed. stops the interest rate hikes. Looking at Prosper's loans right now, he could trade that 7.5% variable debt to 6.5% fixed debt and have a loan that is NOT secured by his house. Not a bad deal. In the meantime, the people who offer him the money will still be making more than what they're earning on their savings accounts. Are there risks? Absolutely. However, looking at the Prosper site, it looks like at least some people are willing to take these risks. Am I one of them? Not for the forseeable future. Is it worth watching a bit? Yep, especially since I have some money in a small cap financials mutual fund . . .