Prosper.com, a peer to peer lending company that made its debut in the United States in 2005, is still rapidly growing in popularity. The company has worked through several models of peer to peer lending strategies before they have finally perfected a more streamline process used today. Early investors were subject to receiving lower rates of return but the company has turned things around and has developed a reputation for doling out loans worth millions of dollars every month.
Prosper’s Lending Process
The process of peer to peer lending through Prosper is relatively simple. Borrowers can apply for unsecured loans through the website. Loan requests range from $2000 and $25,000 and the interest rates established by the company will depend on the credit history of the applicant. Typically loan interest rates through Prosper range on the low end for those with good credit from 5.93% and as high as 35.64% for those who have credit issues in the past.
There is an origination fee for a Prosper loan which ranges between .50% and 4.50% which is incurred by the borrower. The total amount of this fee is also dependant on the applicant’s credit score. Otherwise there are no hidden fees associated with a Prosper.com loan. Prosper.com offers loan terms in one, three, and five year terms. An amortization schedule is established to determine repayment amounts.
Prosper loans can be requested for any reason and many people request the funds to cover costs of home improvement, auto financing, and educational needs. The borrower must complete an application, detailing the purpose of the loan and must submit to a credit check. Interest rates will be determined by an applicant’s credit background.
Investor Background
Investors looking into peer to peer lending may wish to invest funds as a way to diversify investment portfolios. Investors can supply funds to applicant’s request for a loan and will receive a good rate of return on repayments. Credit scores of the applicant are taken under consideration and investors get to choose between the variety of loan terms and reasons listed by the applicant to find the right criteria for their funding.
Investors did not always get a high rate of return in the early days because of how the lending process was set up. Since the changes have been made, the investors of Prosper.com have been earning higher rates and seem more satisfied with the Prosper lending process.