Prosper Communicates Well

If you're like me, you want to have timely and accurate information regarding what's going on with your money.  I like that Prosper instantly sends you an email to let you know if your loan offer is outbid.  Below is one of the first notices I received.  Click here or on the title of this post to visit Prosper.com.

From:	Prosper (No reply)
Received:	Oct-22-2009 3:37 PM PDT
To:	Toastmaster007
Subject:	You were outbid! Listing #XXXXX

Dear Charles,

You have been outbid. This means that other lenders bid at a lower yield percentage. By bidding your minimum rate from the onset, you can help prevent having to rebid your offer should another lender outbid you later.

If you want you can bid again now:

Bid again now

Helpful links:

• Wondering why you were outbid? Learn how bidding works.
• Want to place bids automatically? Choose a portfolio plan.
• Want to place more bids? Search listings now.

Title: Paying off CitiBank Mastercard
Listing #: XXXXXX
Amount requested: $7,500.00
Current yield: 15.30%
Listing ends: Oct-22-2009 3:57 PM PDT
Time left: 0d 0h 19m

Your bid amount: $25.00
Your minimum bid yield: 15.32%

Regards,
Prosper 


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You can see that my minimum bid on this particular loan was 15.32% and when all the bidders collectively pushed the rate below that my bid was null and void.  When Prosper sends this email it gives you a chance to bid again at a lower interest rate if there is still time left.  If you look closely you will see that when I received this email there were only 19 minutes left to bid.  If you are serious about a particular loan you need to stay on top of it.

"You Choose Who Gets Your Money"

There are lots of borrowers to choose from on Prosper.com.  You choose who gets your loan of $25 or more.  The borrowers are rated by Prosper and you can decide what level of risk is within your comfort zone. I choose to take on higher risk borrowers and we'll see what happens.  I'll share some facts about my first Prosper loan recipient in today's post.

My first borrower's loan originated on October 28, 2009. I purchased $25 of his loan on 10/27 - 1 day earlier. There were less than 40 lenders who had successful bids.  The borrower is paying 35% and all the lenders receive the same rate - 34%.  (As far as I understand the bidding process, all lenders receive the same rate on all Prosper loans).  The 1% difference goes to Prosper.  This loan is the borrower's second at Prosper.com and he has made 24 payments on the first one to reduce his amount owed from $2,000 to below $900.  All his payments have been on time.

This borrower is listed as military enlisted, a full-time employee with over 20 years at his employer.  The site allows for personal statements by the borrower and in his he says, "I always pay my bills no matter what."  I know that a lot of people appreciate blunt statements like this.

Prosper rates this loan in what many would consider a very, very risky category.  They estimate that loans like this will not be paid back 25% of the time.  Because of his personal statement and the fact the he is long-term military, I decided to take a chance.

Keep in mind that when you bid, you might say that you are willing to accept 17% interest, but if all the lenders together only bid the loan down so far, or not at all, then you will receive the interest rate that everyone else receives.  In this case, that is 34%.  Many would say that that rate is fair given the high risk rating he has received.  Until I am proven wrong, I will look at this as receiving a very generous interest rate from a military man who has given us his personal assurance that he always pays his bills "no matter what". His track record with Prosper backs that up.