Prosper.com - Oline lending for small loans
Need money but don’t know where to get it?
Well as long as it is up to $25,000 and even if you credit is less than perfect and you are not sensitive to paying high interest rates…
Meaning that you are a real estate investor or want to be….
Check out www.Prosper.com. It is a pretty nifty concept. They describe themselves as the People to People Lending Network and basically this is how it works:
1. You want to get some money to do whatever – start a business, pay your credit cards off, fix your house, buy a new lawn mower; fix a house; go current on a Short Sale transaction, buy a sink from Home Depot, pay closing costs, put up an EMD – you get the idea…
2. You need up to $25,000.
3. Your credit is good or may be it is not.
4. You go to www.Prosper.com and set up a free account and post your needs. I have seen 2 real estate investors put their projects with pics of the foreclosure that they are trying to fix and hence they need money.
5. Prosper runs a credit check and grades your credit. You have indicated already on how much interest you are willing to pay. Typically loans are amortized over 3 years. They have a loan calculator on their site so you can see how much is your payment going to be.
6. So lets say you need $1000 – bunch of people come and put up whatever they feel like it loaning you – I have seen $50 to $500 – but instead of borrowing money from one person – a group of people lends money out.
7. Prosper collects the money, takes care of all documentation, and sends you the money.
8. Prsoper also invoices you every month for the loan payment. Cool thing is that they report all these payments to credit bureaus. So if you don’t pay up, you can get a credit late; but if you do it actually helps you build credit.
9. When the transaction is done, you are reviewed and your payment history with Prosper starts to build up. Kind of EBay Star system. Next time may be you can offer to pay less interest rate because you have proved your credit worthiness.
10. Prosper charges for Borrowers: - 1% closing fee: If you are a borrower and your loan is funded, you will be charged 1% of the amount borrowed or $25, whichever is greater. For example, if you take a loan for $5,000 to help pay for your wedding, you will be charged $50. The 1% is taken from your loan immediately, so in this example your loan is for $5,000 and you'd receive $4,950 in cash deposited into your bank account.
11. Prosper charges for Lenders: 0.5% annual loan servicing fee - The annual servicing fee is accrued daily, and is based on the current outstanding loan principal. This fee is accrued the same way that regular interest is accrued on the loan.
For example, on a $5,000 loan at 10% interest, the servicing fee would be $40.40 over its full 3-year length. Because the servicing fee is based on the daily principal balance (which is an amortized value), it will change on a monthly basis, and the servicing fee for a loan will vary based on the interest rate and the length of the loan.
They actually have a pretty decent Help page that you should read if getting some money interests you. It is all unsecured, without collateral and you never interact with the people who are tossing money at you. Prosper is the entity in the middle.
Very interesting and any of you do get some out of them; post a comment on this entry.