05/27/2008 05:00 AM
By: Lindley Pless
Just because the credit crunch has tightened lending in recent months doesn't mean securing loans is impossible. Prosper.com is an online community that focuses on lending and borrowing money.
"It's like sitting with an individual, speaking with them, looking at what they have to offer you," says Proper.com lender Isaac Kleinbart. "They are putting their income documents on the table. They are putting credit history on the table and they're telling me, would you lend."
Kleinberg is one of over 710,000 members and his loans are just a small part of the $142,000,000 the site has funded since launching in 2006.
The site's founder, Chris Larsen says he wanted Prosper to be America's first people-to-people lending marketplace.
"Peer-to-peer lending has really gone mainstream because some of the traditional options have gone away or really changed in a fundamental way," says Larsen.
Prosper facilitates everything from home improvement loans to auto loans. Borrowers create a listing and set the interest rate they're willing to pay. Lenders place bids as low as $50 toward the loan at the rate they're willing to receive.
"It's better to make a hundred $50 loans than it is to make a single $5,000 loan and really build a portfolio of micro-loans," says Larsen. "It's exactly what the credit card companies do and something we have built tools for to make that easy for you."
There are no fees to use the site, post a listing or place bids. Fees only result from obtaining a loan as a borrower or having your loan serviced as a lender.
There is a closing fee, so if you're a borrower and your loan is funded, you will be charged a percentage of the amount borrowed depending on your credit grade. There are also fees for failed or late payments, and for lenders, there is a 1 percent annual loan servicing fee.
For Kleinbart the end goal is obviously to make money, but he says it's really rewarding to lend to people who have no other option aside from Prosper.
"People are out there with bad credit that never meant to establish bad credit and if they go to a traditional bank they are not going to be given a chance, because everything in the United States is based off credit," says Kleinbart.
He says all but one of his borrowers have always paid on time, and because the process has been so rewarding, he'll continue to lend to those in need.
Source: http://capitalnews9.com |
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