I became a lender on Prosper so that I could see how the whole process works. I made a loan of $50, which is the minimum and used the automated investing option.
This means that Prosper will use its algorithm to choose a loan that is the best match for me according to the criteria I put in. I funded the loan and the system just told me that I should expect $1.59 on January 14, 2008 and then every month thereafter.
I know that it seems like just a small amount for the cash I invested but I am taking it slowly right now because I do not have a lot of money to invest. That money was actually my savings for this month.
The loan is currently funded at 8.9% so that should be a nice little rate of return for me on my investment.
I am still looking at becoming a lender on the site because I have some ugly credit card debt that is at a very unattractive rate that I would like to get lowered so I can save some money.
I will see how things go and then set up my loan in a few days.
This is an interesting post. I always read about some of these bloggers that have thousands lent out on prosper but I don’t ever see anyone take it from the beginning. A small start but this I feel this will be a very informative ongoing series.
That rate sure beats the brick and mortar bank savings account. Of course it is not FDIC insured, but you don’t have to put all your savings in there.
I will be looking at your results with interest. Good luck.
I am thinking about signing up with $50. I figure if I lose that, it is not too bad. The $25 activation bonus is a nice perk though.
Very interesting indeed. I followed some of your other examples regarding the ING Direct accounts. I only opened it with 10$ but that’s all I can afford right now. If its as good as everyone says it is, it’ll give me more opportunity to get a return back on my savings.
This Prosper idea seems like a good idea to test out too, once I get my funds coming in.
Hey Meg even $10 is a great start to saving. When I started my savings I was only putting in $2 a month because I was making minimum wage and that was all I could afford.
I gradually increased it when I got more income and soon you will be saving much more.
Just keep it up.
I can’t get the math to work out for some reason.
Are you on a 36 month repayment?
50/36=1.388
1.59-1.388= 0.201
So then 0.201×12 months = 2.41 per year
and
2.41/50 = 4.826%
Where am I going wrong?
@ Jagular…I have no idea what the math from Prosper is. All I know is I sent them $50 and the loan is set for three years. That is the interest rate they showed me the person is getting the loan at and that is the figure they said will be my incoming payment in January.
Hmm.. thanks for the article. I’m researching before I start up this new idea. I was thinking a little more than $50, but not sure how much I want to try out.
I don’t know that I’m too comfortable with people defaulting their loans on me though! I’ve not found anyone fuming about the risks of this investment yet.