Let’s Start With The Prosper Short Review
Prosper Pros – My favorite part of Prosper is the way interest rates are set and agreed upon. Instead of saying “you have this credit score, you get this interest”, Prosper works on a bidding system. Borrowers list the amount of interest they’re willing to pay while investors list the bottom line interest they will accept. The deal is made when the borrower and the lender agree on a rate. This is one of the reasons I say Prosper offers real “social lending”. This unique lending system ensures that all parties are happy. By cutting out the corporate banks, or the middle man, investors can get a greater return and borrowers can get better rates at the same time.
Prosper Cons – Prosper definitely isn’t for everyone. The truth is, you have to have an Experian score of 640 or higher. But, that is to ensure that the lending peers don’t take too much of a risk. Prosper had much more cons, as all peer to peer lending did before 2008. In 2008, the SEC stepped in and considered peer to peer lending to be a form of securities and such companies that sold securities would have to be licensed. On 2 companies did and, the world of peer to peer lending became far less risky for both the lender and the borrower.
Overall – Is Prosper a strong investment that you really should be thinking about? Well, that’s not my call, that’s up to you and your securities advisor. It’s not because Prosper is a bad idea, as a matter of fact, that couldn’t be further from the truth! Prosper is a great company but, because every portfolio is unique, without knowing you personally I wouldn’t be justified in giving you advise with regard to investments like this. However, if you are a borrower, this is a great way to go! Because it is peer to peer lending, a lot of the middle man fees the banks charge are cut out of the equation…Although, there are clear fees for defaults that I’ll get to later!