Prosper is one of the leading peer-to-peer lending organizations that currently exist on the web today. The other major competitor is Lending Club. It is easy to get up and running on Prosper. This article will show you the five easy steps you can take to become a lender on Prosper.
1. Create an account
The first step is to create an account. To do this, visit Prosper.com and select the Join Now button. Next select the Get Started button under the Invest Money section. This will establish an account by providing Prosper with all of the information they need in order to provide you with the necessary tax information for your year end reporting. It will also establish your identity so they money you upload in step two is identified as yours.
2. Upload funds
The next step is to transfer funds to your account so you have money available to make an investment in the loans that are available to you. In order to transfer funds, you need to add a new bank account. In oder to do this you can click this link and download the specially coded fax sheet. Fax this sheet and a copy of a voided check from the account you want to connect with. Once this connection is made, you will then be able to upload funds into your account and select your loan in step three below.
3. Select your loan
Now that you have funds transferred to your Prosper account, you are ready to select the loan you would like to invest in. Select browse listings under the invest drop down list in order to find a list of loans that you can invest in. You can select loans that have higher rates of return, but you need to be able to accept the risk that these borrowers are less likely to pay you back and more likely to default. On the other hand, you can accept a lower return by selecting borrowers who have a better financial history and are more likely to pay you back with interest. Take time to analyze the investment loans that fit your risk tolerance.
4. Invest funds in the selected loan
After you have completed your analysis and have selected your loan, you can simply enter how much you are willing to invest in this loan and select the Invest Now button. This will apply funds from your account to this loan. Once the loan is fully funded, it will originate and be issued to the borrower. You will then start receiving payments each month for the life of the loan.
5. Monitor your performance
Once you have invested all of your account balance into your investment loans, you will be ready to monitor the performance of these investments. You will start receiving payments each month on the loans you are invested in. When you receive enough money to make a minimum contribution to another loan, you can go back to step 3 and select a new investment or with drawl this money to the bank account you originally used to fund your Prosper account. If you decide to reinvest, use your experience to select loans that will give you the best performance going forward.
I realize that this overview was very basic. My goal was to provide a simple explanation on how to get up and running with peer-to-peer lending on Prosper. Check back later as I will be adding additional details on how to maximize your investment in Prosper.com. I am also planning to invest $500 in Prosper and show you on a month to month basis how these investments are working out for me.
I was one of the early investors in Prosper back in 2005. As you can see below, my experience was not very successful as I lost 13.23%. I look at it as a learning experience and an educational expense.
Looking forward to hearing your investing experience on Prosper. Best wishes as you manage your investments in peer to peer lending. I really believe this will be a bigger part of the future financial picture.