Happy
About People-To-People Lending With Prosper.com Table of Contents
Preface
This
book provides a roadmap for lenders who want to help out other people by lending
them money through the Prosper marketplace. By using the conservative investment
approach outlined in this book, lenders can better manage the risks associated
with lending money to friends they have never met.
Chapter
1 -- Introduction
This book is written for investors and lenders who do
not have a background in consumer finance, yet who wish to participate in this
new form of interpersonal finance. A premise of the book is that many people will
want to engage in passive lending, where they automate the process of finding
and bidding on listings. People can also choose to automate the process of finding
appropriate listings to review and then bidding on them manually if they wish.
Chapter
2 -- Getting Started
To become a lender on Prosper, you first have to register
with Prosper, have your bank account verified, and then transfer money to your
Prosper account. It’s also important to realize that lending money to consumers
is risky. As a result, there are a variety of safety precautions to be taken to
manage this risk.
Chapter 3 -- Basic Lending With
Standing Orders
Standing orders are instructions to Prosper’s computer
for finding and bidding on borrowers’ listings that meet your search criteria.
By using standing orders, you can run a highly-automated virtual business that
works whether or not you are signed in to your Prosper account. But standing orders
have to be designed correctly or you could be bidding on listings that have a
high likelihood of becoming delinquent and then defaulting.
Chapter
4 -- Working With Groups
Groups are the foundation for Prosper because
they represent communities of borrowers and lenders with shared interests. Groups
also let group leaders create “virtual credit unions” of borrowers and
lenders in cyberspace. This chapter describes what groups are and how lenders
can work effectively with groups and group leaders. Group affiliation can be included
in advanced searches and standing orders when searching for appropriate listings
to bid on.
Chapter 5 -- Using Multiple Standing
Orders
A set of standing orders can work in concert to implement a lending
strategy. This chapter describes the various factors to consider when developing
such a system. The chapter concludes with recommendations for when to use various
types of standing orders.
Chapter 6 -- Dealing
With Late Payments and Defaulted Loans
Delinquencies and defaults are a
cost of doing business on Prosper because loans are made to consumers. But delinquencies
and defaults are mostly an emotional issue to the lenders because Prosper outsources
the collections process to collections agencies.
Chapter
7 -- Exiting the Lending Business
The time to start thinking about how
to exit the lending business is before you start lending in the first place. Amortized
loans pay interest and principal every month, but you have to wait until the loan
is paid in full before you can get all of your principal back. If you need to
get out early, you may be out of luck and you need to factor that possibility
into your financial planning.
Appendix A -- Additional
Aspects of people-to-People Lending
People-to-people lending sites can
be used for social lending and for managing private loans. There is also a list
of URLs for the resources mentioned in this book.
