prosper.JPGHave you heard of Prosper.com? I had a while ago and was curious about it. It takes the idea of loaning/borrowing money to a whole new level, and I’m still learning about it. Some may jump at the entrepreneur opportunity, whereas others may be put off by the risk. I take the entrepreneurial perspective on it.

But before I jumped in as a lender, I wanted to know what it was like as a borrower, get a full aspect on it. So I signed up. The picture at left isn’t mine, just a screen shot of what things look like. After signing up as a borrower, they have to verify your account; the one money will be going into and eventually out of. It is then that you can either borrow as a lone entity or try to become part of a group and perhaps get a bigger number of bidders.

Bidding is the big deal here, kind of like Ebay, tweaked. After Prosper checks your credit worthiness and assigns you a grade, this will determine your opening interest rate. People will start bidding to fund your loan, 50 here, and 100 there and so on. Ultimately, you want a loan that is 100% funded. If it isn’t fully funded, it is my understanding you would not get any of the money.

I submitted for a pretty small amount in comparison to what is out there, I wanted the loan to go fully funded so I could know how this all worked, plus I got a better interest rate here than on the card I was going to pay off. It was quite the experience to see people deeming my story (you have to give a reason for the money) and my credit grade worthy enough of them lending the money. The loan is only up for 7 days for people to bid on, so when days went by that no one bid, I got a little nervous. I can imagine how someone would feel who was trying to get some money to help pay off medical bills.

After my loan was fully funded, I still had a few days left, it is at this time that people can still bid to lend me money, but it becomes something more in my favor. My interest rate goes down. Nothing great, mind you, only .05%. But every bit helps when that affects your payback amount and overall payment by the end of the loan.

After my 7 days is over, a notice was sent to me that the money, minus a 25.00 fee, would be dropped into my bank account. Then the following month will start the automatic payments back out to the lenders. I can’t determine the date of payback, but it seems to be based on the first date I activate the “ad” for the loan.

The biggest thing that impacted was the responsibility of the loan. You can get loans from family and friends and work with them to pay them back; they may even forgive the loan if you aren’t able to pay. You can get loans from banks and credit cards and though you pay them, they aren’t personally connected to you. This loan is a mix of both. The importance of paying this loan back is similar to a bank, and the personal aspect is about as close as you can get to getting a loan from a friend.

Unlike a faceless lending master in a building or behind a paper statement, now I know who the master is and they have families and lives just like me. If you are curious about this, I would be willing to answer further questions you may have.