A Penny Saved

Officially launched on February 5th, 2006, Prosper.com is the U.S. sister site of London, U.K. based Zopa.com. Prosper can be defined as a Social Lending Marketplace.
A snippet from the Techcrunch Review:

It generally takes 2-4 days to close a loan, according to Prosper. However, a borrower can request an expedited loan, which will take the first lenders who meet the minimum requirements for amount and interest rate.

Prosper charges a number of fees, including a 1% closing fee to the borrower and a 0.5% annual loan maintenance fee for lenders.

Benchmark has funded both Zopa and Prosper. Other Prosper investors include Accel, Fidelity and Omidyar.

I’ve done a little exploring and it really is quite the novel idea. Basically, you sign up for the site and can choose to either become a Lender or a Borrower or Both. The beauty of it all is that there really isn’t much for a middle man. Prosper tries to stay behind the scenes, but they do an excellent job of keeping everything, including the money, under control.

Lenders find that they have to set up an account and transfer money to a Prosper.com account in order to lend the money. I believe that one of the chief reasons for this is a guarantee of the money for lending. If you said you’d lend $20,000 to someone and then when prosper tried to transfer the money out of your personal account to find that there was really only $200… well, you get the picture.

Borrowers have an even easier time of it all. Sign up, verify a bank account(Paypal like verification) and consent to a credit check. There may be a little bit more when actually posting a loan request as I haven’t gone all the way through that yet.

One of the best parts of the site is the group function. Say you belong to a specific group of people. Firefighters is the group that is used as an example on the site. So say you are a Firefighter. A group is either set up already or you set up a Firefighter group. Then other Firefighters join the group. As more people join the group, and take loans out and loan money out, the group gets “Group Rewards“. These group rewards are then shared out among the group members. Depending on how the group is set up, the rewards are split in one of 5 ways. 0%, 25%, 50%, 75% or 100%. The percent tells you how much of the reward goes to the group’s benefit. The group benefits from these rewards through a lowered interest rate on all loans made to group members. The Rewards are accumulated by being a “good” borrower. Make you payment’s on time and pay off your loans and the rewards begin piling up.

Swing on over and check it out. I’ve set up a group called Young Professionals. Click on the “join group” link on the right hand side and lets grow our wealth together.

Technorati Tags: Prosper, Zopa, Borrow, Loan, Young Professionals