A Borrower and a Lender BE!

The famous Shakespearean quote ''Neither a borrower or a lender be...'' goes out the window with Prosper. Prosper is a new and promising site for both those looking for low interest loans for up to $25,000 and for investors looking to make a high interest on their money with as little as $50.

So how does it work?

Prosper connects people in seek of funds with those willing to lend funds with interest.Technically you're buying the loan from prosper. Borrowers have their credit checked and are then rated from AA (high credit scores) to HR (high risk). Their rating in addition to their Debt to Income ratio is displayed in order for investors to gauge the risk of the borrow.

You can lend as little as $50 and loans are ammortized on a 3 year schedule. There's the potential for high interest revenue and you are urged to spead your risk by lending small amounts to various borrowers as opposed to putting all of your capital into one or two borrowers. This works like any other bank loan and you get to be the banker! Late payments are charged a late fee, defaulted loans go into collections and have negative impacts on the debtors credit report and score.

Now let's talk fees. On the borrower's side there is a $25 fee to Prosper and of course the actual interest on the loan. On the lender's side there are no fees however Prosper does keep half of one percent of the interest on the loans. Good deal for such high returns.



Have a brother, sister, cousin hitting you up for a personal loan? You can agree to fund them through your Prosper accounts. This is a wonderful way to help out a friend or relative in need without getting burned because this loan is for real. Interest is charged, late fees are assessed and non-payment is reflected on credit reports so they have much more at stake than a personal falling out and don't worry, although loans are on a 3 year schedule, they can be paid off at any time.