3 years ago, just before to economy took a huge $#@!, I decided to give Prosper "a try". I had enough emergency funds to allocate $2000 to the experiment. I had high hopes because I rationalized that borrowers borrowing from other people as opposed to banks would be more motivated to pay back the money. My allocation was 15% AA, 70% A, 20% B and 5% C credit ratings. In my view a very "safe" investment. My own credit rating is "A" and I tended to put myself "in their shoes" as a judgement of their ability to pay, a very naive approach. What I learned was this:

Trust people that admit their mistakes and put forth a rational plan to remedy them.

Do not trust people that allege they make X amount of money and only have Y amount of expenses and therefore have an incredible Z amount of monthly surplus to pay the loan. In the end it doesn't make sense

It really sucks when the economy takes a big ol' $^@!.

Collecting agencies are useless. They got me back exactly $0 of the charged-off balance.

People lie. A lot.

Women pay back loans more than couples and men (sample size = 40)


So, here are the results of the "Prosper Experiment"
My nominal yield: 12.9%
My actual yield: -4.2%
Charged-off notes: 25%
Fasted Delinquency: 4 mo
Money Invested:$1971.82
Payments Received: $1888.44