A lousy investment for lenders. People who can't get loans from traditional means want your money.
I have been a Prosper lender for three years and I've tried a variety of loan strategies from conservative to risky. I've spread my loans across different borrowers and nearly all of them have defaulted.
While the website offers a lot of information about borrowers, like credit score and debt-to-income, there doesn't seem to be any correlation between it and the likelihood of the borrowers paying you back. When a loan goes into default, there's a small chance that you'll get back a few cents on each dollar you lent.
The best bet for a lender is probably the Portfolio Plans which allow you to invest within a given risk tolerance. But again, don't count on getting your money back. I would like to see Prosper publish the percentage of loans that default.
Everyone wants to earn the highest possible return on their investments. And this site implies high returns with social benefits; namely, lending to folks who have no other place to get money. But this is a last resort for borrowers and you shouldn't kid yourself into thinking that the high interest rates are guaranteed, or even likely. .
Recommended:
No
