Tuesday, June 17, 2008

Prosperous Lending

One of the things I am going to do is set up passive income streams so I don't burn myself out trying to make my goal. Working another 40 hour job might do the trick and get me to my $900 goal, but it might also kill me in the process. (And I very much like being alive.)

I thought I would write today a bit about Prosper.com. I am a bit new to the program but so far I love it. The concept is one that I can support - basically it puts together people who need a loan with people who want to lend. They do it on a large scale of course, so it isn't one to one. The borrowers then can avoid the big banks and the lenders make a nice interest rate - simple. Personally, I like it from a business perspective. I'm the type who believes that people can take things into their own hands. I'm not a big fan of big banks - especially with the credit crises of recent days. I like the concept of people working together.

As I say, I am new to this so I don't know how this whole thing is going to pan out. Just because I love the concept and so far my experience has been positive, but that doesn't mean it guaranteed by any means. As things happen, I will try to post about them so people can see my experiences.

Here's what I have found so far: Frankly, the sign up process takes a bit longer than expected. In order to transfer money to Prosper.com you have to create an account and then give them your routing and account numbers. They then make a deposit in your bank account and then withdrawal a small amount. (It was less than $.25) It worked very similar to setting up a Paypal account or setting up an online savings account. The actual process of creating the account was easy - they walk you through all the steps. But I will say that it took several business days for me to see the deposit and withdrawal. This may have been because I did it just before Memorial Day weekend, but the process took about a week. I was checking it every day and starting to get frustrated. I might not have been if someone had warned me about it.

Once that was completed then I had to transfer money to my Prosper account so I could bid - and that took another 5 days. Basically it was almost 2 weeks before I could lend. I found that a touch frustrating since I like to get going on things right away.

Once the money was in the account though, Prosper gave me a $25 welcome bonus, which meant my $50 went straight up to $75. Not bad! You have two choices then - you can choose the loans you want to bid on, or you can use one of their Portfolio Plans and let them do it for you. With a Portfolio Plan you choose your own template: Conservative, Balanced, Moderate, Aggressive or make one of your own. I'm madly busy right now with the move and everything else, so I chose the Moderate Plan and let Prosper deal with the rest rather than choosing and bidding myself.

Here is some of the information on my first loan that I helped fund:

Purpose of loan:
This loan will be used to pay down my car so that I can sell it. I have a new company car and no longer need my 350Z. It is worth about 16,500 but I still owe about 21,000 on it. The rest of the money will pay off my biggest interest credit card.

My financial situation:
I am a good candidate for this loan because I have good credit, I have a career in a company with a low turnover rate, I make good money, and I have never been late on a payment before. I also do make more money than I have listed, but I was not sure how to list commissions, so I only listed my base salary.

It gives a lot of other financial data as well - monthly expenses, salary, debt to income ratio, etc. It also has a nice photo of him and his wife on their wedding day. I like that - it gave it a personal touch.

I then transfered over another $25 so I could add it to my referral bonus and make another $50 bid. This one I put in a Balanced Portfolio Plan so I could see the difference between how the two perform. I just did that today so I don't have details yet. I will let you know how it works as time goes on.

If you have questions, I recommend checking out Prosper.com at their website. (If you do sign up after reading this article, please use my link so I can get credit for the referral.) As things happen - I will keep you posted!



7 comments:

cdreher said...

I signed up off of your link, so if they don't give you credit, let me know! I'm a touch frustrated too... there is a loan I want to bid on but the money transfer delay won't let me. :(

Dawn said...

So far they have been great about telling me when people sign up from my site, so I think they are good about it. But I will certainly let you know!

passivefamilyincome said...

Dawn - Good luck with your lending. I would like to follow your status so please post often! I try to post on my status of now 40 loans as much as possible. How many loans to you currently have?

passivefamilyincome said...

Dawn - not sure what happened to my last comment, but I hope to see your status on your Prosper loans in future posts! How many loans do you currently have?

Dawn said...

PFI -

Sadly I had to put comments in Moderation - I was getting a few spam comments, so I had to put the kibosh on that.

I have two Prosper loans now. My original loan and the second one that was funded with part of my money and part of my "new Sign Up" $25. I will be sure and pot on how they do! It should be interesting to compare yours and mine since you bid on loans and I am using the portfolio plans.

passivefamilyincome said...

Dawn - I hear you on the spam! The one late loan that I have been writing about on my blog actually was from a portfolio plan and had an 'A' grade. When I first signed up I used the portfolio plan and got 4 loans immediately bid on. I wanted more control, so I turned it off.

Dawn said...

PFI -

I didn't realize that bad loan was from a portfolio plan! Hmmm.....

Well, I have two up and running and think I will wait to add more until I see how these go. We'll have to keep each other informed!