Prosper.com: A New Lending Model?
A: I saw this one on Inman Blog the other day and just thought it was a very interesting idea created by the former E-Loan founder. Think of a 'Citibank-Meets-Ebay' business model and you get to Prosper.com.
Prosper.com is a online marketplace for people-to-people lending and was launched to make consumer lending more financially and socially rewarding for everyone. According to the website:
The way Prosper works is intuitive to people who have used eBay. Instead of listing and bidding on items, people list and bid on loans using Prosper's online auction platform.Visually, the online lending platform works like this:People who want to lend set the minimum interest rate they are willing to earn and bid in increments of $50 to $25,000 on loan listings they select. People who lend can easily diversify using "standing orders", which automatically make many small loans to different borrowers.
Borrowers create loan listings for up to $25,000 and set the maximum rate they are willing to pay a lender. Then the auction begins as people who lend bid down the interest rate. Once the auction ends, Prosper takes the bids with the lowest rates and combines them into one simple loan. Prosper handles all on-going loan administration tasks including loan repayment and collections on behalf of the matched borrower and lenders.
UrbanDigs Says: It's just such a new idea (lending from people online through a bidding model rather than from a bank) that personally I would feel a little nervous about it. That's not to say its a bad idea or that you won't find a great rate through a service such as this, its just that its so new and I'm not sure exactly how it works or the background of who you are lending from or to. I would love to hear some feedback from anyone that has used this new site so that I can hear concrete evidence of its quality of service.
~ E-Loan cofounder starts new Internet lending site
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