Carnival of Peer-to-Peer Lending #7 — Rate Cuts Hit Prosper

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By Pinyo, on April 3, 2008

Welcome to the Carnival of Peer-to-Peer Lending #7: “Rate Cuts Hit Prosper” Edition! When I first started investing in Prosper last December, the estimated return for a Conservative Portfolio Plan was 9.20%. Last time I checked, this number was down to 8.00% and it’s even having problem winning bids at this lower rate. I guess this is bad for me, but good for borrowers and the economy.

Other interesting peer-to-peer lending articles:

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Pinyo
Pinyo is the brain behind Moolanomy personal finance blog and a few other web sites. If you like this article, please subscribe for free daily email updates.

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6 Comments

  1. gravatar
    Vered
    April 3, 2008, 9:23

    I don’t know… never heard about Prosper until today. Checked it out… I think I am going to stick with my mix of stocks, bonds and cash for now. Plus, as a holder of municipal bonds, I am lending too – though admittedly my return is much lower than the advertised Prosper return.

    Keep us posted. :)

  2. gravatar
    Christine
    April 3, 2008, 10:40

    I don’t think I would ever borrow through Prosper or other P2P lending sites. I don’t know… I guess I don’t fully understand how it works.

  3. gravatar
    Mark @ TheLocoMono
    April 3, 2008, 17:16

    That’s funny. The average rates on my loans actually have gone up, even for the borrowers with good credit. I am starting to wonder about the accuracy of their portfolio alogorithm (spelling?).

  4. gravatar
    Pinyo
    April 3, 2008, 19:38

    @Vered – It’s an interesting concept, but definitely not for everyone. Basically there are thousands of borrowers and lenders in these networks. Let’s say a borrower needs $5,000, whole bunch of lenders would each loan a small amount (as little as $25), so a $5,000 loan may be borrowed from hundreds of lenders.

    Most of my money is in cash, stock, and bond too. I basically have “play” money in these networks.

    @Christine – I have read one of the borrower said he borrows from LendingClub because he gets better interest rate than other unsecured loans and there is no pre-payment penalty.

    @Mark – You have to look at the “adjusted” return after fee, default risk, etc. You could get a 20% loan that is expected to return only 5% after adjusted for risk.

  5. gravatar
    Vered@MomGrind
    April 4, 2008, 7:58

    I guess I would be comfortable playing with very small amounts of money over there to begin with. I will give it some thought.

  6. gravatar
    Daniel
    April 4, 2008, 12:29

    I did some calculations the other day comparing loan portfolios vs CD’s. The comparisons are without reinvestment of returns from loans, but it is still pretty interesting. I’m still working on a simplified model for including reinvestments while taking into account loan defaults.

    http://www.step3prophet.com/20.....me-nu.html

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  1. P2P Loans and Baseball
  2. Commentary on Prosper interest rates, and market movements « CommunityLend blog
  3. Links: Lending Club Interview
  4. Weekly Roundup - M-Network Website Edition
  5. Carnival of P2P Lending » Carnival of P2P Lending #7 Posted
  6. Requesting Submissions for the next P2P Lending Carnival | Personal Loan Portfolio

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