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Prosper $50 New Account Promotion Offer

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A New Way to InvestWhen peer to peer lending first started, the biggest name in the market was Prosper. I was skeptical about the whole business of peer to peer lending and it showed in my review of Prosper, which was more about peer to peer lending than it was about Prosper itself. Since then, with the arrival of SEC oversight and other competing businesses like Lending Club, I have a little more faith in peer to peer lending networks.

$50 New Account Promotion

Prosper fell behind LendingClub because both had to enter a quiet period as the SEC reviewed their filings, LC just came out first. The “notes” were considered securities and subject to SEC oversight. Now that Prosper has started accepting new borrowers and lenders/investors, they’ve decided to really push it hard by offering a $50 bonus for new lenders who bid on two loans.

The only requirement is that the $50 sign up bonus cannot be immediately withdrawn and must be invested by bidding on loan listings before December 31st, 2009. If you don’t invest it, it expires.

Prosper is also running a cash rebate for investors. If you invest $1,000 – $4,999 then you’ll receive 1% cash rebate back into your account. Invest $5,000 or more and get a 2% cash rebate back into your account. The Cash Rebate Fall Promotion for Lenders program expires November 15th and the rebate is deposited by December 4th.

Do you have experience with Prosper that you’d like to share? A lot has changed in the last two or three years in the social lending world and I’ve been unable to participate because residents of Maryland can’t invest!

{ 21 comments, please add your thoughts now! }

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21 Responses to “Prosper $50 New Account Promotion Offer”

  1. Gui says:

    I think all investments have risks. You mentioned on your previous post on Prosper that there are ways to game the system with fraud.

    Well, this is true on the stock market too. I think Lehman Brothers’ stockholders were a lot more exposed to fraud than Prosper investors. But that doesn’t make the stockmarket a bad investment overall.

    It’s not about whether there are risks, but how the marketplace can manage and mitigate those risks. And I think Prosper has done an excellent job at mitigating the risks of P2P lending.

  2. Jenny says:

    I’ve borrowed twice now from Prosper and I love it. The first loan was $7000 at 8.65% for three years and the most recent was $8000 at 9.65% for three years. I got the 2nd in response to the credit cards jacking up my interest rate and slashing my credit limit no reason. I was so angry about the credit card behaviors that I wanted to get my debts as far away from them as possible.

    There is no hassle, I applied for the loan, watched people bid the initial interest rate down, and eventually got the cash. Once the loan was funded, they called me to verify who I was. You have to provide documentation that you are who you say. They direct deposit the money into the account you specify a day or so later.

    The only downside to the process from a borrower’s point of view, is that the process can take some time. It took about a month from my initial request to actually getting the moeny.

    On the plus side, They’ll never raise my interest rate for no reason like the credit card companies do. They report to the credit bureaus so if you don’t pay your debt you get dinged on your credit and they will send you to collections if you don’t pay.

    I’d much rather borrow from a person than use credit if I have the option. Especially now.

  3. byikes says:

    Jenny, Stop borrowing money.

    • Jenny says:

      Well obviously. Thank you so much for your supportive and well thought out comment. I was merely posting regarding my experience using Prosper, as asked for in the blog post. I have been working to get out of debt for two years now and was doing quite well – never a late payment, never any trouble actually PAYING my monthly bills until the credit card companies started screwing every customer they have. Thankfully I was relatively lucky, but I have no intention of giving them another dime in interest. I did not take on MORE debt with Prosper, I paid off a suddenly high interest debt with a low interest loan.

      I do not excuse my debt nor do I blame credit card companies for the fact that I accrued it. However there are very few instances where you have a contract with someone and one party can just change the terms without any warning or agreement from the other party for no reason. I would not complain if they raised my rates because I paid late or missed a payment, however that is not what happened.

      The final statement in my comment was geared towards people who might have circumstances where they may need to borrow money and might otherwise use a credit card or go to the bank to get a loan. For instance a business loan or to pay off debt like I did. I was not implying that I specifically would borrow more money.

  4. Joe the Plumber says:

    Way to go, Jenny. I applaud your attitude and progress on turning your situation around. I like the idea of peer-to-peer lending, and it is very interesting to hear from both borrower and lender perspectives.

  5. zapeta says:

    It looks like the minimum to open an account is $25, but if I can get $50 free to invest it makes it worth checking out.

  6. NewPerspective says:

    I became a lender at Prosper.com about 2 years ago (just before the situation with the SEC). To be quite honest, I’ve been terribly disappointed. Most other lenders I’ve talked to are also.

    To date, about 25% of my loans have been charged off due to non-payment and/or bankruptcies. I realize some of this may be due to the current state of the economy, but even Lenders who have been with Prosper from the beginning have said the default rate on loans before the recession were about the same as I experienced. (Ironically, I’ve found the credit score of borrowers seems to be absolutely no indicator of their likelihood of defaulting on the loan!)

    Another common complaint among lenders is Prosper’s lack of incentive to pursue late or delinquent payments. As a result, they have a very poor track record of recouping losses for lenders.

    To make a long story short, I’m in the process of pulling my money OUT of Prosper. Since loans are for a 3-year term, I have about 1 more year to go. In the end, I will have lost probably between $1K – $2K on a $9K “investment”. The only “bright spot” is that that loss isn’t too bad in the current economy! LOL

    • Juan says:

      Would have lost a lot more if you invested in S&P500 index funds.

      • NewPerspective says:

        Juan,

        “Technically” I wouldn’t have lost anything because I wouldn’t have sold yet. ;-) However, if you compare “roughly” the time I made the loans to roughly the average time they were charged off, and compared that to buying/selling an S&P Index fund, yes, you’re correct… I would have lost close to $2,500.

  7. LeLa says:

    Great bonus, but I already lend through Kiva and LendingClub… very happy with both!

  8. Patrick says:

    “Since then, with the arrival of SEC oversight and other competing businesses like Lending Club, I have a little more faith in peer to peer lending networks.”

    Haha! SEC oversight? Yeah that is one ‘sharp’ agency. Best and brightest, I’m sure.

  9. Christiaan says:

    Prosper has way too many defaults I hope they produced a new way of locating frauds and defaults. Lendingclub is a much better option and the last 6 months I have had no defaults.

    • NewPerspective says:

      Not sure exactly what your experience is with Prosper, but I thought I’d give you fair warning…

      I had 88 loans through Prosper. NONE of them defaulted for the first 11 months. I’ve now had 23 defaults (26%).

      I truly DO hope Lending Tree works better for you than Prosper did for me, but keep your eyes wide open… At 6 months I was bragging to my co-workers about how well I was doing!

  10. I have been a lender on Prosper for a couple of years now. It has most certainly been a learning process and is NOT a passive investment. You have to actively manage your portfolio and do some extensive analysis to pick your loans.

    So far I have had 56 loans and 1 default. All others are paying so far. I assure you that my performance is not typical and I should feel “lucky.”

    I have my own strategy for picking loans which includes quantitative and qualitative analysis on my part. I have only invested a small amount for now as a “hobby” to see if over time I am a good loan picker. I will invest more if I can see a good return from it. I reinvest all payments I get into new loans.

    Prosper is a form of entertainment and a hobby for me. I have the potential make a return on this hobby which is an added bonus. It is not for everyone but if you are truly interested in finance and lending it can be a good fit for some. You won’t get rich off it but it can be a good alternative asset if managed correctly.

    - Foo Finance (Bobby)

  11. Soccer9040 says:

    I was a lender on prosper ($2,000) invested maybe and then they went into their quiet period. Before this I was humming along with only 2 defaults. Both were are a result of me trying out one of their automated portfolio things. From then on out I suck with investing in top grade loans that I felt the borrower told a compelling story.

    I then flipped sides and tried it from the borrower side. Everything I was looking for in a listing I made sure I included. I ended up getting $4,999 @ 6.something %

    (Don’t worry I was productive with the money. I used part of it as a downpayment on our duplex which is cashflow positive)

    Well then it all kind of went down hill. The defaults started speeding up and then the quiet period. I started pulling money out saying I wont invest anymore here, then the quiet period came and went.

    Now I want to give it another try because I think the new model will create less risk for lenders. Unfortunately for me I live in Ohio which isnt a licensed state.

    So my question is this? Does anyone know the progress of these unliscensed states? I want to get back in the game?

    • Baldwin says:

      With Prosper, I thought Peer-To-Peer lending could help individuals who couldn’t get loans from banks and other financial institutions. For me, as a borrower, it has been disappointing. Prosper is looking for people who has a high credit rating (who has defaulted) instead of looking at people with good credit rating and a good standing with creditors in regards to paying on time.

  12. mikestreb says:

    Too bad they still aren’t letting people in Ohio lend…

  13. aua868s says:

    thanks Jim…”invested” the free 50 bucks…had to monitor carefully to avoild being underbid!

  14. NewHorizon says:

    Hey folks, the jury is in. Google for Mark Gimein’s review of Prosper.

    @Juan: there’s a comment there about how appropriate it is to compare Prosper loans to the S&P.


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