Alternative to stocks
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Alternative to stocks
I saw a write-up in Money magazine on a site called "Prosper.com" that was described as an ebay-type loan company.
Does anyone have experience with, or an opinion on this company?
It looks very interesting, as you have the opportunity to contribute a portion, say $50, toward a non-secured consumer loan. The company (Prosper) takes loan applications from people and charges a 1.5% loan origination fee, and a .5% lender fee to get debtors and lenders together.
When you look at potential lenders, you see basic credit information like debt to income ratio and a credit rating (AA, A, B, C, HR).
Now the statistics / finance question:
The material published by the company indicates a mean default rate for various credit ratings. The information implies that loan rate minus lender fee minus predicted default rate = expected rate of return BUT, I don't know think that this tells me enough to quantify the risk.
The idea of getting a piece of the high-interest consumer loan market, and spreading risk among a lot of borrowers is attractive...
Does anyone have experience with, or an opinion on this company?
It looks very interesting, as you have the opportunity to contribute a portion, say $50, toward a non-secured consumer loan. The company (Prosper) takes loan applications from people and charges a 1.5% loan origination fee, and a .5% lender fee to get debtors and lenders together.
When you look at potential lenders, you see basic credit information like debt to income ratio and a credit rating (AA, A, B, C, HR).
Now the statistics / finance question:
The material published by the company indicates a mean default rate for various credit ratings. The information implies that loan rate minus lender fee minus predicted default rate = expected rate of return BUT, I don't know think that this tells me enough to quantify the risk.
The idea of getting a piece of the high-interest consumer loan market, and spreading risk among a lot of borrowers is attractive...
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Satansedan
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08-21-2015 05:59 PM