An article in today’s Wall Street Journal about online lending reports that Zopa, a British person-to-person lending market, is starting operations in the U.S. It will join, among others, Prosper.com, which the WSJ reports will issue $100 million in person-to-person loans this year, with future loan originations projected to be $1 billion in 2010 and $9 billion in 2017. Can you imagine: $9 billion in person-to-person, unsecured loans? That should certainly shake up the credit markets.
I love cruising the loan offers at Prosper.com. There is a lot of information attached to each offer, and I’d imagine you could learn quite a bit about human behavior, decision making, and biases by playing with their data. I wonder if any economists are already working with the Prosper data (think “What Makes You Click,” the online-dating paper); I am looking forward to learning more about Prosper first-hand in a couple of months.
Even a quick glance at Prosper loans seems to show that lenders leap to loan money to people with a “good” cause – expanding a family business, e.g. — as opposed to simply consolidating credit card debt. A lot of the loan offers are great reading, too.
I found this listing particularly interesting: a couple who is trying to adopt their second child, the first one from China and the second one from Guatemala; meanwhile, the husband recently had a heart attack and their grown daughter “got shot in the face at work in September.” (Note to reality TV producers: maybe you guys should be cruising the Prosper site, for show ideas.)
What I found most interesting was this link to the family’s budget. It shows that their two adopted sons will provide more than $1,200 in monthly income:
Because my husband is retired, his dependents also get a Social Security Check. Because he did not go with me to China, we have to readopt our China son for this to start therefore it won’t start until Jan or Feb, but he is going with me to Guatemala.
I didn’t know that you could add dependents like that under Social Security provisions. The couple is hardly going to get rich by having two adopted sons, but the cash certainly changes the incentive of older couples to adopt, whether from the U.S. or beyond.
As the market for person-to-person lending continues to expand, I look forward to reading more such tales via Prosper, Zopa, and all the rest.
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The issue with Prosper is that the incentives of the servicer (desire to gain protection against fraudulent borrowers) are not always in line with the incentives of the servicer (maximize loan $ volume), and contrary to bank lenders, the prosper lender has little buying power with which to negotiate.
The issue with Prosper is that the incentives of the servicer (desire to gain protection against fraudulent borrowers) are not always in line with the incentives of the servicer (maximize loan $ volume), and contrary to bank lenders, the prosper lender has little buying power with which to negotiate.
Note that “older” couples often aren’t permitted to adopt. Several countries have age limits, and trust me, adoption is a very costly undertaking and there is only way adoption makes your life more rich (and it isn’t financial).
Note that “older” couples often aren’t permitted to adopt. Several countries have age limits, and trust me, adoption is a very costly undertaking and there is only way adoption makes your life more rich (and it isn’t financial).
Credits are as vital as education and health. Prosper could be another way to make money online. Mostly, the more we get to try those new financial solutions, the more financial institutes lose their monopoly over credits.
Here’s a short video interview of Chris Larsen, ceo of Prosper.com
Credits are as vital as education and health. Prosper could be another way to make money online. Mostly, the more we get to try those new financial solutions, the more financial institutes lose their monopoly over credits.
Here’s a short video interview of Chris Larsen, ceo of Prosper.com
I am wondering why nobody has brought attention to the fact there is no facility for lenders to take anything as collateral under the Prosper arrangement. If there was an option to secure your loan it would be a useful service.
Loan sharks don’t even even invest in unsecured debt, why would I?
I am wondering why nobody has brought attention to the fact there is no facility for lenders to take anything as collateral under the Prosper arrangement. If there was an option to secure your loan it would be a useful service.
Loan sharks don’t even even invest in unsecured debt, why would I?