Prosper update - Still pulling out.
22nd June 2007
It has been a while since I posted that I was pulling out of Prosper. I still see no reason to continue investing in this vehicle.
Out of 44 active loans, 8 are currently late with 3 being 4+ months late. One of my first late loans has actually been paying but is still behind. One loan is in bankruptcy so I doubt I’ll see anything from it. Two of my defaulted loans have been sold, providing an average of 8 cents on the dollar of their residual value…
I’ve also had a few loans paid off which, while I like getting my money back, do not provide much of a return.
To date I’ve pulled $650 out of my Prosper account (my total investment was $2,000) My total account value currently stands at around $1,700 although I expect a few more defaults to occur so this may be overstated. It will be interesting to see what my total return will be after all of the loans are either payed off or defaulted on. My guess is that it will be somewhere in the neighborhood of 10% which isn’t bad but is still not worth the risk in my opinion. If the default rate is this high in a booming economy, imagine what it will be like when we hit a recession…
June 22nd, 2007 at 9:31 am
I wholeheartedly agree. I also have posted about the default problem and its effect on Prosper’s expected return, it just makes the whole investment far riskier than the market with less reward.
June 22nd, 2007 at 9:46 am
I haven’t put quite as much money in, but I haven’t had a single default and everybody has been paying on time. I just didn’t have time to keep looking for new loans so I haven’t been investing more than one new loan every few months.
June 22nd, 2007 at 2:26 pm
I was doing quite well until December/January. I had one or two lates but no defaults. I think people’s finances took a turn for the worse with holiday spending (over spending) then continued to snowball from there. Overall I don’t think I’ll lose money but the return will not be high enough to make the time needed to look at loans worthwhile. I am much better off spending that time on my business while I put money to work in more automated investment vehicles.
Glad to hear you’re doing well though. What is your loan portfolio like all A’s and B’s or do you have some C’s, D’s and E’s too?
June 23rd, 2007 at 7:49 am
Hello. Another point that new Prosper lenders might overlook is that “no defaults yet” after a year does not mean much because you might need 2 years just to get your principal back when I imagine that debtors are getting bored of paying and the luster of their vacation/wedding/business-that-did-not-take-off is long forgotten.
July 26th, 2007 at 12:55 pm
I have 11 loans the oldest of which is about a year old. ZERO defaults. getting an interest rate of around 16%. Just dont get greedy you can get a decent return on prosper. what i dont believe is the people that bid on loans for people that are currently in default on other loans, or have had defaults in the past. If they dont pay their other other loans, what makes you think they will pay you. Just look for a long credit history and no defaults or records. Its pretty easy.
August 4th, 2007 at 11:20 am
I am so sorry to hear that people are being dissapointed in lending with prosper. I have just recently posted a $6,800 @ 29 % and I am hopeing that there are people out there who still believe in those who are in need and are morally and ethically as well as leagally obligated to pay you back. My husbands is partner in a bisuness that has thrived for 10 years and has had an excellent credit history. Our personal Finance trouble began when our credit card debt became second to my being diagnosed with a large mass tumor and followed by a hysterectomy. I am forty years old have been marrried for over ten years and have three children. I am a nurse for county emergency but if you are not aware the county does not pay California Disability Insurance. So there it goes…. A year has past and no bank or credit consolidation will touch us. We have owned two homes before and we are afraid we will not be able to get above water to purchase again. So, for those of you who do put yourselves out there I tank you. I havent had to many hits yet but Im keeping my fingers crossed. What comes around goes around for those who help others. Its fortunate that life’s unforseen circumstances put borowers like myself in search for you lenders. Thanks for those of you who have helped others. prosper Screen name: familyindebt3
August 7th, 2007 at 7:02 am
MrFred - Count yourself as lucky. 16% is a great return. I’m actually getting a decent return (in the neighborhood of 12%) but feel that for the risk involved there are better investments out there.
J - Agreed. All of my loans paid something back. To date I’ve received payments roughly equal to 50% of my investment and still have 75% of my investment in loan value.
Theresa - Almost spam but I’ll allow it.
Best of luck to you and your husband.
November 1st, 2007 at 12:17 am
[…] Prosper seems like a great service with a lot of potential, but I just wish they wouldn’t compare guaranteed investments like savings accounts with their service, which although they claim is, “safe, easy, and free,” does bear some risk (3-year unsecured loans). This means to spread out your risk, they recommend you spread out your lending. Another personal finance blog points out the stresses of watching some loans default […]
December 1st, 2007 at 6:47 pm
I invested 32800 in prosper around may, so far I have 4077 in unpaid late loans, almost 80% of my loans are AA A and B and even a 1000 dollar AA defaulted (4+ months late) I have been rolling all my payments that have been made back into AA A B loans (I just put 8% so I never get outbid (almost)) and
Active loans: 257 Principal loaned: $37,125.00
Payment status:
237: Current
2: Payoff in progress
4: Late (<15d)
3: Late
3: 1 month late
4: 2 months late All these add up to 4077 and change
1: 3 months late
3: 4+ months late
Avg. interest rate: 13.87%
Principal repaid: $3,799.44
Interest & fees paid: $1,654.59
Service fees: -$86.29
Loan value: $33,708.97
is where I stand so far … I am still losing money so far… I plan on pulling pymnts as an income starting the first of the year, should be about 1100 a month, so as long as people do pay I am ok, but to me it almost seems like a place that makes it easy for thoughtless heartless people to rob nice stupid people. Its like riding a bad stock purchase so far, I have not gotten a warm fussy feeling that I have made any money yet. I’ll roll over the payments one more month to new loans, but as of 01/08 I at least want to extract my original investment. (Which should take about 2 years)… Shoulda bought Apple….
December 3rd, 2007 at 12:29 am
I believe you are making a smart move — I am personally not convinced of the propser model yet.
December 14th, 2007 at 12:10 am
[…] loans). This means to spread out your risk, they recommend you spread out your lending. Another personal finance blog points out the stresses of watching some loans […]