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A social lending site

imirza

Contributor
Jul 29, 2007
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Similar to www.prosper.com . There are others as well. Problem is there is no guarantee you will ever get your money back. These loans are unsecured. With the worsening economy there has been an increase in defaults. I have over 50 loans with prosper and 10 are either late or in default. I can't lend money unless its secured by real estate or something else like the borrowers kidneys or heart :)
 

PEERless

Bronze Contributor
Jan 23, 2008
1,469
106
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I am both a lender and a borrower on Prosper. I think it's a smashing concept. I like guaranteed investments, but I like 15%+ even more!
 

Bilgefisher

Bronze Contributor
Read Millionaire Fastlane
Aug 29, 2007
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Aurora, Co
Just an update. I was on prosper today and they are no longer allowing new loans or new lenders until they get by the SEC.
 

Inphinity

Contributor
Read Millionaire Fastlane
Aug 20, 2007
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Auckland, NZ
Out of interest, does anyone know of one of these sort of reputable social lending sites that is not US-only?
 

MattThomas

New Contributor
Jan 16, 2009
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Long Island, New York
I think it is a very interesting concept. I'm not too knowledgeable on social lending, but I'd imagine that it is in its infancy. I think as it gets more and more refined and more popular it could become increasingly useful for startup financing, especially in this economy.

Similar to www.prosper.com . There are others as well. Problem is there is no guarantee you will ever get your money back. These loans are unsecured. With the worsening economy there has been an increase in defaults. I have over 50 loans with prosper and 10 are either late or in default. I can't lend money unless its secured by real estate or something else like the borrowers kidneys or heart :)
True, but that is exactly the point of investing. You are being compensated for the risk that you will not get your money back. If it was guaranteed that you would get your money back, the yield you would receive would be very close to the T-bill/note/bond rate. With investments, like life, nothing is guaranteed.

I'm not that familiar with Prosper, but I hope that if some of these loans are in default, they should raise the yield you are receiving to compensate on the increased risk for lending through them.

I wonder if the the real problem with this, as imirza has described, isn't the fact that the return is guaranteed, but maybe insufficient information is provided to the lenders to make a lending decision. I haven't lent through any of these sites so I don't know, but maybe providing more information to the lender is something these social lending sites should consider.
 

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