I think this is how it works for the lenders: for example if I have $1000 that I want to loan to people through Prosper.com, I could loan the money to five people, $200 each, and earn different amount of interest rates depending on each borrower's credit rating. For a borrower, Prosper.com says they will do some checking to filter possible fraud.
Apparently, some say the idea isn't new, nothing is new under the sun? I still think it's very exciting. I can't wait for something like this in New Zealand. At the moment Prosper.com is only for U.S. residents with U.S. bank accounts.
New Zealand bank interest rates are rather sad (7.5% is the highest at the moment). The highest interest rate I've seen of Prosper.com is 28%! Ok, so you get that sort of returns from people with rather risky credit ratings (like D or DD), but it's still better than buying Lotto I'd say. And I think their fees aren't that greedy either (lenders pay 0.5% yearly, borrowers pay 1% one off of amount borrowed).
I don't know how this kind of service will work in New Zealand since we don't have 'social security number' (perhaps I'm wrong here?). So will we have a trademe of New Zealand lending and borrowing anytime soon? Only time will tell.
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Comment by juha, on 12-Feb-2007 12:09
"Social Security Number" or SSN is for American citizens only...
Comment by Louis, on 18-May-2008 13:14
You are exactly correct about prosper. That is exactly what I did. I invested 1000 dollars in 11 different loans from 50 to 150 each. I am earning between 11% and 22% on those loans (average 14.53%). I only invest in people with AA and A ratings and so far they have all paid on time. In one month I get about 13 dollars in interest. Banks in the US are paying like 2.5 %, so it is a good investment. My username on Prosper is 'betterbank' feel free to contact me for more details. www.prosper.com/join/lend/betterbank Good post - I thought I would help confirm your findings. :) Louis
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