A Reader Question – Is Prosper.com Trustworthy?

A reader left me the following question about Prosper.com…

“Thank you so much for this site. I have a total credit card debt of just over $29,000, thanks to grad school and my own bad choices. I really want to get this paid off quickly, and in researching my options, came across an article on prosper.com in Consumer Report. I also found your blog in searching for reviews on person to person lending. Can you tell me more about your experience? In particular, do you feel this is a trustworthy site?”

I’ve realized after reading this comment that I haven’t really talked about my Prosper experience much lately. I guess the main reason for that is because now that I have my loan – it’s just a matter of paying it every month. There are no worries about transferring balances or a raising interest rate. There is much to be said with consolidating credit card debt into a more traditional loan.

To answer the reader’s question about Prosper, I do feel it is a trustworthy site. I have had my loan for a while now with no problems. So, I feel the company is a good one. Now, with almost everything, there will be some people that can ruin the experience for others. Scammers can be found within the users at the site and they are usually borrowers. I haven’t kept up with recent happenings, but last I knew the Prosper team was working hard to weed out borrowers that are scammers.

Since some people looking to Prosper for a loan may despirately need money quickly, that also provides an ideal situation for lenders that are scammers. They may attempt to contact borrowers to make a deal outside of the website. They may also try to get personal information from you saying they will make a bid if you give that info. Now, I haven’t heard of this happening, but the potential is there.

When it comes to Prosper, there are many blogging about it as well as writing about it, so read as much as you can. Prosper does seem to provide chances for those who may be unable to get loans through a bank. The lenders do look at the numbers, but you have a chance to give them your story as well. Often, banks just don’t give you that chance; however, sometimes they do like they did to a reader here.

With anything you do, just be cautious of giving out your personal info and make sure you read about something before jumping in. Prosper may work for some, but not others. Do what feels right for you.

Posted by Tricia on December 3, 2006 at 11:09 PM in Prosper Borrowing | 8 Comments »
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jason responded:
Posted: December 6th, 2006 at 3:30 am
Hi Tricia,

Please inform your readers about the hidden costs of borrowing on prosper- in particular, groups that have big fees (i.e., ones that do not have 100% reward sharing). As a lender, I’m finding more and more people blindly joining groups that have leader which take as much as 4% in fees (Prosper calls these “rewards”).
http://www.prosper.com/public/help/topics/groups-rewards.aspx

I’m finding a lot of borrowers blindly join groups and don’t even realize the fees that group leaders are getting, which ends up hurting them by reducing the rate that a lender would get.
luanne responded:
Posted: December 8th, 2006 at 7:12 pm
I have just started trying to get a loan on Prosper. I have been reading on the forums there and there are some seriously negative peoplr there. I thought it was a place to help those of us who can’t get help other places and apparently its not.
I am one of those unlucky single moms who needs financial help now. Aren’t there people out there who are actually willing to help?
Any ideas would be appreciated I am running out of time.
kirkwalsh.com » Blog Archive » The Carnival of Personal Finance responded:
Posted: December 10th, 2006 at 3:09 pm
[...] Tricia presents Is Prosper.com Trustworthy? posted at Blogging Away Debt, saying, “I’m not sure whether this would be better in debt or investing since I’m discussing Prosper. I’m a borrower there, so I ended up putting it under debt. Feel free to change. Thanks for hosting this week!” [...]
TJP responded:
Posted: December 16th, 2006 at 10:27 am
I think Prosper is a good idea, and it provides options for borrowers who get denied by banks when asking for loans.

I plan to use Prosper for lending means only, because I agree that group fees are exhorbant and costly.

Great Q & A session on Prosper. I’d love to hear more about your experiences with them in future posts.
Joel Odom responded:
Posted: December 19th, 2006 at 9:58 am
I’ve been a lender on Prosper for about six months now. It’s been a really good experience. here is my blog about my experience.
Tony Bendetto responded:
Posted: December 25th, 2006 at 9:04 pm
After reading 30+ articles both in print and on the net, I think using Prosper.com for investing is about as risky as buying stock on the stock market, considering the reliability of CFO’s these days.
Adventures In Money Making responded:
Posted: February 17th, 2007 at 9:16 pm
I’ve been a lender on prosper for about 6 months. i think you do need to follow your gut on whether the borrower has the capacity or inclination to pay back.

I prefer mainly fresh grads with no credit, although i have lent money to older people who seemed down on their luck and needed $5k. so far out of 29 loans in the past 6 months no one has defaulted.
Final Words on My Prosper Borrowing Experience » Blogging Away Debt responded:
Posted: October 29th, 2007 at 10:37 pm
[...] Tips for Using Prosper for Debt Consolidation My List of Tips for Listing a Loan on Prosper Resources for Prosper Borrowers Reader Question: Is Prosper.com Trustworthy? [...]