Making Money Resources

How would you like to earn a 10% return or more on your money?  Not with stocks, not with a pyramid scheme, but a legitimate business model that works and can show historical returns. 

Prosper.com is a peer to peer lending site.  People go to the site who need a loan, and they are put together with people who have money to lend.  It’s a pretty nifty thing they have going, and another way to make money online.  Passive income, pays better than your savings account, and you’re helping people.

Prosper allows people who need to borrow money put a posting up, stating how much they need, the interest rate they are willing to pay, and other details.  Prosper pulls their credit report and lists a credit grade for them.  This credit grade will tell you how high of a risk the borrower is.  You decide to lend to a borrower, prosper puts the loan together, services the loan and pays you as payments are made on the loan.

The good thing about their setup is that you don’t have to loan any single person the full amount they are asking for or the full amount you have to lend.  If you have $2,000 to lend, you can lend 20 people $100, spreading your risk out among many people, and keeping your returns safe in case of a default.  If someone is looking for a $10,000 loan, you can contribute $100 and other lenders will make up the differance.  If a borrower does default, you don’t have to try to collect the money, the website takes care of that for you.  Worst case scenario is if your loan is not repaid.  If this occurs (and it looks like there is about a 5% default rate, 1 out of 20 loans)  it gets sold to a collection agency, you get paid a portion of what they sell it for and the borrower gets a collection ding on their credit.

Prosper also will manage a portfolio for you.  If you want to be aggressive with your investments, you can potentially realize a larger gain.  If you want to minimize your risk, they have portfolios for you as well, lending only to A credit borrowers with no late payment history.  They also have programs that fall in between.  You can target a return rate, and they will build a portfolio around that, taking into account the historic default rate for the types of borrowers you are lending money to.

It is a very well set up site, you can be a lender without doing much at all, no servicing of loans, no collecting payments, no checking credit.  They do it all for you, take care of the contracts and send your loan payments to you.  If you are looking for a passive income stream, this is a pretty good one to take a look at.  You can make 9%, 10%, even 12% return on your money depending on how aggressive you want to be. 

I hope this has been informative, please check back in and let me know your experiences with Prosper.com.  Good luck!