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Guest kawikaho
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Guest kawikaho

Anyone ever use this service before?  I've heard about it way back in the day, and today I've found an interesting discussion about it.  It's a peer to peer lending service, somewhat like what credit unions were like before they evolved into traditional banking.  Basically, you put your money into a marketplace that has a bunch of private individual lenders and borrowers.  These people are every day folks.  Anyways, based on credit worthiness, you can lend your money to individuals much like lending money to corporations via bonds.  Interesting concept.  What I found interesting was that many of the folks there said if you're going to lend, lend to females only.  Almost everyone was unanimous in their conclusion that guys typically default, whereas women don't.  I remember watching The Ascent of Money series that talked about this phenomenon in Latin America. 

 

Anyways, food for thought.

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there was some recent discussion about Kiva.org which allows lending to people in developing nations. http://blogs.cgdev.org/open_book/2009/10/kiva-is-not-quite-what-it-seems.php

 

The illusion of choice and control is a powerful psychological motivator for most donors.  Although they present the idea that you get to choose the person you lend it to... that is not what happens in practice.  

 

I'm not sure if Prosper works the same as Kiva in this regard.

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Guest kawikaho

Be very very careful -

http://boards.fool.com/Message.asp?mid=28145940

read several of messages -

 

Thanks for that, and no worries, I was never interested in participating in this idea.  However interesting it may seem, it just seems like an idea built on false premises: that people are inherently trustworthy.  Besides, I once lent a friend I thought I could trust $1500.  I am now with one less friend!

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Forget about prosper, go for lendingclub.com.  They actually screen their applicants!  No one with a credit score under ~670 gets in to request a loan.  They claim that the 'average' lender gets 9% a year.  They have some interesting presentations on their websites.  Supposedly the lowest defaults on loans are on credit refinances (makes  sense..) and get this... on weddings and vacations!  If someone stops paying, they get the collections people on them after a certain amount of time, plus all payments are reported to the credit score agencies, so people who default or don't pay will get their credit score whacked.

 

https://www.lendingclub.com/info/about-us.action

https://www.lendingclub.com/info/statistics.action

 

Average Interest Rate 12.97%

Annualized Default Rate 2.97%

Average Net Annualized Return 9.67%

 

Here's a guy who's invested with them a lot:

http://www.peerlendingwealth.com

 

If someone actually wants to open an account let me know..  They have a special offer where new lenders get $60 of 'free money' to lend:

 

http://blog.lendingclub.com/2009/12/10/get-a-piece-of-the-bank’s-action-give-away-6462-this-holiday-season/

 

I put it in my "junk bond" asset allocation.  Haven't had it for over a year yet, had a few defaults.  Haven't drawn any hard conclusions yet, but it's definitely better than prosper!  Worth some entertainment money...

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Thanks for that, and no worries, I was never interested in participating in this idea.  However interesting it may seem, it just seems like an idea built on false premises: that people are inherently trustworthy.  Besides, I once lent a friend I thought I could trust $1500.  I am now with one less friend!

 

That's why my motto is "friends don't lend friends money" unless it's < 20$.

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I am not familiar with prosper.com but i also have had a lendingclub.com account for about 6 months .  I have not had any defaults yet but im sure they will come.  The great thing is that it does not cost to diversify your loan portfolio so you can limit your losses in case of default.  I really enjoy the whole concept of playing banker and its entertainment for me. 

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Thanks for that, and no worries, I was never interested in participating in this idea.  However interesting it may seem, it just seems like an idea built on false premises: that people are inherently trustworthy.  Besides, I once lent a friend I thought I could trust $1500.  I am now with one less friend!

 

That's why my motto is "friends don't lend friends money" unless it's < 20$.

 

 

Right, and if your friend is worth more to you than what he wants to borrow,

consider giving him the $.  Then you'll only lose the $ and not the friend. :)

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