MousePotatoPower

You might as well make money online. My personal checking account doesn’t give me any interest and it hasn’t for over 10 years. My personal savings account isn’t much better.

Last year, I found out about a micro-lending website called Prosper. Prosper is like an e-bay for loans. I signed up as a lender and ponied up $300. 10 months and 7 loans later, I am sitting on $318.71 with no defaulted loans. The math doesn’t quite add up. I know I’m securing interest rates above 14%, but earning $18.71 on $300 only comes up to about 6.25%. Either way, I’m turning a better profit than any bank account I have seen.

As a borrower, you can borrow up to $25,000 per loan, typically at interest rates below what a bank would offer you. As a lender, you must loan at least $50 per borrower. You “win” the loan by bidding the lowest interest rate. I have been able to secure as high as a 17.42% interest rate.

Your mileage may vary. A few caveats that you will want to know:

• Prosper is open to anybody. The typical lender does not fully understand the risks involved with lending and will usually bid too low of an interest rate (based on the borrower’s credit history).
• Low interest rates are good for borrowers.
• Borrowers can sign up without verifying home ownership or even a bank account. To me, this screams high-risk loan.
• The expected annual loss rate that Prosper displays only applies to borrowers with less than 20% DTI (debt to income) ratio. Borrowers with a higher DTI will default on loans at a higher rate.
• Prosper (and micro-lending) is relatively new and unproven. Will you jump on the wave and ride it to potential fortune? Or is this trend headed for disaster?

Sign up by clicking on this referral link by August 31, 2007 and successfully fund a loan within 90 days of signing up to earn $25.