I was trying to emulate pensioner’s bidding strategy with my risk tolerance.  I came up with a saved search based roughly on my standing order interest rates, extended credit filters, and ordered by time left remaining such that the soonest to end was at the top.  My strategy was to identify some candidate loans and if they stayed on my radar bid near the end.  Auto funding loans are found by my standing orders so this search focuses on non auto funding.

I found one that I thought was even better than I expected, my risk tolerance and pensioner’s interest rate.  At Prosper Days he said he doesn’t look at any loan under 20%.  Clean B Credit (0,0,0), 20% Interest Rate, 25K loan. 2nd business (keeping their day job), long credit history, long day job history. Only 2% funded at this point with a little over 2 days to go in the listing.  Here is the listing (5 misspelled words):

Me and my wife together for a year in our regular jobs make around 52,000.00 a year. We pay 1200.00 for mortgage. 320.00 car payment, we have a small loan that we pay 400.00 a couple of small credit cards 33.00 for one and 62.00 for the other. Our cable and home phone along with Internet we pay 100.00 amont[sic] for the bundle package. On our buisness[sic] last year we did not get any buisness[sic] until October so from October to Decemeber[sic] we made 3500.00 in sales. As far as this year we are quoting three different jobs which right now I do not know what the value will be but already have made around 2000.00 in sales just this year.  All I pay out each month for the buisness[sic] is a fee for being a Dealership for a Sporting Goods Wholesaler is 40.00 a month. I pay 50.00 a month on product insurance. I pay 100.00 a month for cell phone. The I have one credit card for 60.00 a month and another with 35.00 a month that is it.  After we pay everything we have around 500.00 left over for the month.    
Thanks, Scott     

I excitedly fired off an an email to a trusted resource.  Here is the response:

Thanks for sending the tip on the listing.

I am on the fence on this one. All of the numbers, except one, are strong. I like the 0 delinquencies, the stability and the long credit history. The one number that really sticks out is the 20 credit pulls. I normally don’t weight the credit pulls high. I basically ignore 2 or 5 pulls. But, this, in conjunction with his story makes me worry. His story does not add up. He has $500 extra, so what does he need a loan for, and why would 20 institutions say no if he has B credit? What’s up with that?

This would be a good listing to try out the new ask_a_question feature. Maybe he has a good explanation. I fear that there is a huge hidden negative and he is a B headed for HR.

This listing is just off the margin of my selection criteria. I generally try to keep rates above 20% to yield 20% or more; although, when I see a good E in the high 2Xs% I will rationalize that I can still make 20% because the listing is a good E, not an average E. I will be re-examining that with the new ROI tools and in light of the larger history of lates.

pensioner

Ok, clearly a brilliant off the cuff analysis.  So now to test the new Q&A system in attempt to answer the lingering questions…  I fired off two questions and both were answered…

Q: Why 20 inquiries in the last 6 months? (3 misspelled words)

Because I was trying to refiance[sic] my home. I was also trying to get a loan for my buisness[sic] and I was applying for credit cards for my buisness[sic].  

Q: If you have $500 left over, why do you need the loan? (2 misspelled words)

The reason I would need the loan because that is my personal money and I do not want to touch my personal money becuase[sic] you never know what may happen. I also have asked for this loan so I can build my credit score up more and also be able to fund my buisness [sic]when I have big order.

I am a little perturbed that he makes a distinction between personal money and business money.  This loan being a personal loan and all.  I asked him in a follow up question, but haven’t yet received a response. Q: Follow up question to your personal money response… You are aware this is a personal loan and you are responsible for it even if your business fails?

Yes I am aware of that..

I am satisfied, but then again I can’t spell without a spellchecker. Are you satisfied?

OK so now I bid in a ladder of $50 at each 19.95%, 18.95%, and 17.95%.  If the loan gets fully funded but the rate goes down I will put less and less money into the loan.  Smart choice?

If you made it this far you deserve the link to the actual listing: http://www.prosper.com/public/lend/listing.aspx?listingID=99802

Update: According to prosper, I did not win this listing because it was not fully funded or it was withdrawn.  It was withdrawn.  I don’t know if I would bid again on a 3rd listing.  Maybe if the rate was raised.
 

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