Prosper Marketplace

The company Prosper Marketplace calls itself America's largest peer to peer lending market place.

What that means is that it connects those who want to invest money (the lender) to others who are looking to do the borrowing.

Unfortunately for me, my first awareness of this company did not include this information. I had been contacted by an individual that was trying to allure me into one of those gifting schemes and suggested Prosper for the funding portion.

My first impression was tainted and I immediately passed this company off as most likely being of the payday loan sort.

After finding them once again in an affiliate relationship I investigated the company more carefully and learned about this peer to peer lending method.

I was intrigued!

How Prosper Marketplace works

Prosper Marketplace has been in business since 2005 and is headquartered in San Francisco, Ca.

Prosper allows borrowers to acquire funds for a wide variety of situations. 

  • debt consolidation,
  • auto loans,
  • personal loans,
  • home improvement,
  • small business loans and
  • personal financing for important events such as a new baby or wedding expenses.

As with any loan, your credit and finances are checked.

Prosper will determine the credit score of prospective borrowers and then attach their own prosper rating to that borrower.

A prosper rating of AA is needed to receive the advertised percentage of 6.59%.

Be aware that rates can go as high as 35% for ratings that are poor. When applying to Prosper the application will say that the application itself will not affect your credit. (No hard inquiry)

You are only registering as a borrower at this point. Once you are registered you must then create a listing for the lenders to view.

You must list how much money you are looking to borrow and what percentage rate you would like to receive. Other information you must post is your annual income, occupation and employment status. You must also show good faith intent to repay the loan.

Once the listing is posted, member lenders will view the listing. If they wish to fund part or all of your loan they make a commitment to your loan by purchasing a note. Once there are enough lenders purchasing notes equal to or exceeding the amount of the loan a company called Web bank (the bank that works with prosper) originates the loan.

There are several other pieces of information that can be posted with your listing for lenders to use to evaluate whether they want to make a commitment to your loan.

Usually these are found in your credit report and to become a borrower you must agree that Prosper Marketplace can post these. Only those registered in the program can view this information.

No personally identifiable information is used in these listings. Once loans are provided and in place the payment for such loans are also facilitated by your account at prosper. You will be asked for deposit account information and loan payments are expected to be made by either automatic withdrawals or bank drafts made on that account.

As with any loan or credit product if you make late payments or are over 30 days late with those payments negative information to the credit bureaus will be forwarded or collection activity will be initiated.

Other considerations with prosper

Prosper is not available to borrowers in Iowa, Maine and North Dakota.

Prosper is only available to lenders from Alaska, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Louisiana, Maine, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New York, Oregon, Rhode Island, South Carolina, South Dakota, Utah, Virginia, Washington, Wisconsin and Wyoming. This leaves many out of the investing option. I hope that can change!!

Loans are not guaranteed. There must be a sufficient number of lenders willing to commit to funding your loan.

Repeat borrowers may qualify for discounted rates!

Once the loan is originated there is a non refundable loan origination fee (this is usually disclosed at the time you apply for the loan in a truth in lending disclosure)

There are no prepayment penalties.

Prosper can be a good option when you are looking for funding that is not from the big banks. I like the investing option and the more personal touch toward both the borrowing and investing.

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