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$50 Bonus for New Prosper Lenders

This article was written by in Investing. 12 comments.


Peer-to-peer lending institution Prosper is offering a $50 bonus for new lenders who sign up for for the service and bid on two loans. Peer-to-peer lending is an interesting way for people to qualify for loans and to lend money to others. In an economy where savings account interest rates are under 3% or 2%, it’s tempting to put cash to better use through these direct loans. There is a possibility to earn much more than you would by putting cash in a savings account as long as loans are chosen carefully and you’re willing to accept risk.

There is something appealing about working outside the banking system. Peer-to-peer lending takes a specific power of the financial industry and puts in the hands of individuals.

I tried Prosper a few years ago. A friend of mine was looking to consolidate his credit card balances, but was looking for a better option that putting several thousand dollars onto one high-interest card. His plan was to apply for a loan on Prosper and use the funds to pay off his credit cards. He would then only need to worry about one payment each month with a lower total payment and a lower interest rate than what he would likely get with a credit card.

A Great New Investment OpportunityWhen he asked me about Propser, I offered to help him out by bidding to provide a portion of the funding for the loan. The idea of being an investor appealed to me, but unfortunately, the state of Texas prevented him from participating on Prosper at that time. It is my understanding that he would qualify only for an interest rate higher than allowed by the state.

My adventures with Prosper ended before they began. And I won’t be able to get started. As I began to research investing in a portfolio of loans at Prosper and bidding on individual loans, I was greeted by this message:

Unfortunately, at this time lenders in New Jersey are not able to bid or transfer money to Prosper. If you have portfolio plans, they have been paused. You may transfer money out of your Prosper account as they become available from loan payments.

If you reside in a state where Prosper is allowed to do business, consider signing up for an account and qualifying for the $50 bonus. What is your experience with Prosper?

Updated May 29, 2014 and originally published October 30, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 11 comments… read them below or add one }

avatar Money Progress

I live in Texas too, and thus I am no longer eligible to lend on Prosper. However, back in 2008 I was able to do so. I lent a total of around $1000. My estimated ROI is 8.6% at the moment. I have had 2 out of 10 loans default, but luckily both of those were minimum bids ($50.) One of my loans is $500 and is doing well. This loan was to a member of an online community that is pretty close knit. Another one of my loans for $100 at 20% was paid off early, got $122 from that.

I think the best way to use Prosper is to lend to people you know or people you are connected to in some way.

I've recently started lending on Lending Club since they allow lenders from Texas (but I think we can't trade notes after the fact or something like that.)

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avatar Dan

I began lending on Prosper back in May 2006. Prosper is worse now than it was originally. I stand to lose about $200 of my original $3000 investment. My last notes come due in July 2010.

Prosper's management sucks. They change the lender agreements all the time and make them retroactive. In the current incarnation of Prosper, Prosper itself owns the notes, so if Prosper liquidates, the lenders become unsecured creditors. This is different from the old days, where Prosper lenders held the rights of the notes. Prosper liquidating is just one more risk factor that has to be priced into the loans.

I'd think twice before getting the sign-up bonus from Prosper if it requires you to actually make loans to get it.

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avatar Luke Landes ♦127,550 (Platinum)

Dan, thanks for sharing your experience. It's interesting that lenders would become unsecured creditors in that situation.

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avatar Scott

I agree with Dan.

I started lending with Prosper in March of 2006, eventually investing about $4700. Over the last few years, they've made numerous retroactive changes to the lender agreement. There was never any way of opting out, and your money was locked in.

Also, when those of us who had been around the longest pointed these things out, they would attempt to cover up their actions. At one point they actually shut down their forums and made new ones, wiping out all of the old complaints and warnings. They also threatened legal actions against an outside site hosting forums where lenders could discuss Prosper.

Before anyone considers lending on Prosper, I'd recommend he do his homework. Caveat emptor. I've withdrawn all of my money, and I never plan to do business with PMI (Prosper Marketplace, Inc.) again.

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avatar Eric

Wow some eye-opening comments here (especially since these were the early investors in Prosper).

I just hope Lending Club doesn't take the same route!

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avatar Linea

I would not say no to $50, but as an early lender, I advice to proceed with care on this site. At least I'm not losing money (I'm at 1-2% returns), but I hear a bunch of people are. Whereas on LendingClub, I'm at a nice 8% without taking much risk (going only for A and B loans). LendingClub seems to have a robust collections team and higher standards for borrowers, do they have a sign up bonus too for new folks? I got $25 from them to try it

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avatar mp

i've been using prosper for a year or so and have had no issues, i've had a couple defaults but am still making money on it. i just keep re-investing my money (not adding more) and now have close to 50 loans.

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avatar Dan

Everybody loved Bernie Madoff until the stock market tanked.

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avatar Dan

Everybody loved Bernie Madoff until the stock market tanked.

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avatar Dan

That’s correct, Linea. The median return for seasoned lenders is something like -1%.

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avatar Dan

That's correct, Linea. The median return for seasoned lenders is something like -1%.

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