Information on Prosper Risks and Results
I’ve been using Prosper.com for a few months now and I thought I would update you on my progress. I have about 90 active loans in my portfolio. All of the loans are current. One of the loans was a few days late but is now caught up.
I just ran a performance report (which you can do too from the performance tab) For loans originated in May, June and July and found that in grade AA-D there were no defaults and 53 lates out of about 1300 loans. The reason I chose loans so far back is that there is no chance a loan originated in the last few months can be in default.
We still don’t have enough data to say what additional risks we assume with prosper but I can make a few observations:
- The issue of whether defaults will be higher or lower than the industry statics provided is still an open issue, and will be for at least another year. You should increase the interest rate you are willing to accept to take this into account.
- I’ve been trying to deploy my capital for over two months now and I can’t find enough loans that meet my criteria. Don’t be tempted to over invest in a single loan. Don’t lower your credit standards. You will pay dearly for this. Trickle your money into your Prosper account as needed since they pay no interest on money that is not invested.
- I can tell you I have received about a hundred payments with one late payment that was brought current in a few days.
- The lower you go in the credit score grades the more risk you are taking on. Plan accordingly.
Is Prosper.com riskier than your banks money market account? Certainly! Can you make a higher rate of return? It seems so.
Good luck!