Prosper.com

There’s this website I just heard about called Prosper.com. I have not had much opportunity to study it, but it looks sort of like an E-bay but for lenders. The idea is that if you want a relatively small (< $25,000) unsecured loan, you can go to other people to borrow the money rather than banks.

A lot of financial institutions don’t like this sort of lending to begin with. For the borrowers, the big draw is that you can borrow money (the posts I saw had attracted lots of “bidders” seeking to lend people money) without the hassle of going to a bank, which probably didn’t want your business to begin with.

I’m not sure what the upside is for the lenders. True, they could be getting a pretty good return on their investment–some of the interest rates I saw quoted were in the high teens and even 20%. But there has got to be a risk.

I’m going to look into this further.