Micro Lending Information - Page 2

yourbeginnings · 04-22-2008, 05:07 AM

I have joined Prosper (referral link) it was a pretty painless experience. I decided to start my micro-loan portfolio with $250, bidding $50 on 5 loans. Prosper is similar to ebay in that is uses a bidding system of interest rates. The lowest interest rate bid wins for that segment of the loan.

So far I have funded one 3-year loan for $50 at 10.45% interest and have 4 bids on other loans. Return is better than a savings account....if the loan is paid back. It is a gamble.

From the borrower side it proves to be beneficial that rather than a bank telling you your interest rate is X%, you have hundreds of people bidding getting you a lower rate.

kickchk · 04-22-2008, 10:10 AM

I myself enjoy participating with Kiva, but I do not try to take it as a write-off for taxes, because it's a loan, not a donation. Once it's repaid I can re-loan it out.

http://www.kiva.org/lender/pam9205

starshard0 · 04-22-2008, 03:18 PM

I also have a prosper.com account, and I'm not entirely sure where all this "risk" lies. Maybe someone could explain it a little better.

kickchk · 04-22-2008, 06:35 PM

Quote:

Originally Posted by starshard0

I also have a prosper.com account, and I'm not entirely sure where all this "risk" lies. Maybe someone could explain it a little better.

From their website "Each lender's results will differ depending on the default rate of the lender's portfolio, and may vary over the 3-year term of the loans. Loans and returns on loans are not FDIC-insured and have no Prosper guarantee. Loans may lose value."

There is your risk. So do a little research before deciding on who to loan to.

starshard0 · 04-22-2008, 06:39 PM

So basically I could lose all the money I put in?

kickchk · 04-22-2008, 07:06 PM

There's always a risk. Even money market account, stocks, 401k's can lose money. It's one of those situations where you have to hang in there for the long run. Even if someone defaults, you could in concept make more on another investment. Diversify your loans...as to not put all your eggs in the same basket.

rhino · 04-22-2008, 08:05 PM

I have a prosper account with 4 outstanding loans.
The first payment isn't due till May 1st.

So can't comment on the quality of the loans (I think my average rate is over 10% though when added up), but their website/interface is nice.

I heard leanding club had a lower default rate.

yourbeginnings · 04-23-2008, 04:01 AM

As with everything we do there is some risk involved: Example I have lost 20% of my IRA value between 2007-08. Before I funded any loans I did some research on lenders to see their loan portfolios and the status of their loans made. From my findings a majority of the lenders I viewed their loans were current with some defaults. I used the following website: www.ericscc.com. You can find the lenders screen name on prosper, then get the lender stats from ericscc.com.

I also used this site to do some research on the types of loans I want to fund based on more seasoned lenders lending practices.

starshard0 · 04-23-2008, 08:54 AM

I have a portfolio of 10 loans each for $50. That seems like a pretty reasonable diversification to me.

04-22-2008, 05:07 AM	#11
yourbeginnings Senior Member Join Date: Mar 2008 Location: Atlanta, GA Posts: 121 Reputation: (41)	I have joined Prosper (referral link) it was a pretty painless experience. I decided to start my micro-loan portfolio with $250, bidding $50 on 5 loans. Prosper is similar to ebay in that is uses a bidding system of interest rates. The lowest interest rate bid wins for that segment of the loan. So far I have funded one 3-year loan for $50 at 10.45% interest and have 4 bids on other loans. Return is better than a savings account....if the loan is paid back. It is a gamble. From the borrower side it proves to be beneficial that rather than a bank telling you your interest rate is X%, you have hundreds of people bidding getting you a lower rate. __________________ http://www.yourbeginnings.com - Free Genealogy Hosting Software

04-22-2008, 10:10 AM	#12
kickchk Member Join Date: Apr 2008 Location: Alabama Posts: 62 Reputation: (10)	I myself enjoy participating with Kiva, but I do not try to take it as a write-off for taxes, because it's a loan, not a donation. Once it's repaid I can re-loan it out. http://www.kiva.org/lender/pam9205 __________________ Blog: Southern Blog My Shop: Organic Suds Coupon code "save5on20" and save $5 off order $20+

04-22-2008, 07:06 PM	#16
kickchk Member Join Date: Apr 2008 Location: Alabama Posts: 62 Reputation: (10)	There's always a risk. Even money market account, stocks, 401k's can lose money. It's one of those situations where you have to hang in there for the long run. Even if someone defaults, you could in concept make more on another investment. Diversify your loans...as to not put all your eggs in the same basket. __________________ Blog: Southern Blog My Shop: Organic Suds Coupon code "save5on20" and save $5 off order $20+

04-23-2008, 04:01 AM	#18
yourbeginnings Senior Member Join Date: Mar 2008 Location: Atlanta, GA Posts: 121 Reputation: (41)	As with everything we do there is some risk involved: Example I have lost 20% of my IRA value between 2007-08. Before I funded any loans I did some research on lenders to see their loan portfolios and the status of their loans made. From my findings a majority of the lenders I viewed their loans were current with some defaults. I used the following website: www.ericscc.com. You can find the lenders screen name on prosper, then get the lender stats from ericscc.com. I also used this site to do some research on the types of loans I want to fund based on more seasoned lenders lending practices. __________________ http://www.yourbeginnings.com - Free Genealogy Hosting Software

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04-22-2008, 03:18 PM	#13
starshard0 Senior Member Join Date: Apr 2008 Location: Monterey, CA Posts: 102 Reputation: (10)	I also have a prosper.com account, and I'm not entirely sure where all this "risk" lies. Maybe someone could explain it a little better.

04-22-2008, 06:39 PM	#15
starshard0 Senior Member Join Date: Apr 2008 Location: Monterey, CA Posts: 102 Reputation: (10)	So basically I could lose all the money I put in?

04-22-2008, 08:05 PM	#17
rhino Junior Member Join Date: Apr 2008 Posts: 13 Reputation: (10)	I have a prosper account with 4 outstanding loans. The first payment isn't due till May 1st. So can't comment on the quality of the loans (I think my average rate is over 10% though when added up), but their website/interface is nice. I heard leanding club had a lower default rate.

04-23-2008, 08:54 AM	#19
starshard0 Senior Member Join Date: Apr 2008 Location: Monterey, CA Posts: 102 Reputation: (10)	I have a portfolio of 10 loans each for $50. That seems like a pretty reasonable diversification to me.

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