In my Friday post, I encouraged everyone to think for themselves when it comes to estimated return guidance. It is after all only an estimate. Today, I would like to pimp a listing I have bid on that I feel demonstrates a great return loan, but it is a fairly risky bucket.
There are 2 things about this loan that Prosper is not counting or discounting.
The first is that this person has 0 current DQ. The bucket says 0-1. All the rest of the extended credit is VERY clean as well.
The second is that this is only a $7,500 loan; whereas the bucket extends all the way to $25K.
This is an autofund loan and therefore you will not receive anything lower than the current rate.
Here is how Prosper break it down…
19% Rate
(11.23%) estimated loss
(0.84%) adjustment
(1%) servicing fee
———–
5.93% estimated return
To be sure a 5.93% return is good, but I am not lending on Prosper to receive a 6% return. However, I still bid on this listing. I bid because I think the estimated loss for this loan is less that the average loss of the bucket into which it was placed. Therefore, the estimated ROI will be greater than 5.93%.
What do you think?
Welcome to the 5th installment of Pimp my Listing. I have placed a $50 bid at 19%.
This is a C Credit Homeowner with super clean extended credit. Requesting a loan of $7,500 at 19%.
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Purpose of loan:
This loan will pay off high interest home improvement credit cardsMy financial situation:
We are a good candidate for this loan because we are hard workers and always work very diligently at paying off our debts on or before time. We are working part time jobs as well so we can be debt free except for our house payment in 4 years. This is our goal and we will not stop until we make it. We are a good family and always very grateful and appreciative of everything that comes our way. We always do what we can to give back what has been given to us whether it is just time we have volunteered or in this case a loan to be paid back. We would like to thank you in advance for your help.Monthly net income: $
I could not find an area to add my spouses income so I will show it here as well.
My Net = 3375.00
My Spouse = 2450.00
Total = 5825.00Monthly expenses: $
Housing: $ 1550.00
Insurance: $ 143.00
Car expenses: $ 1305.00 includes car payments
Utilities: $ 335.00
Phone, cable, internet: $ 140.00
Food, entertainment: $ 400.00 Clothing, household expenses $ 300.00
Credit cards and other loans: $ 1000.00
Other expenses: $ 100.00 dance and sports for child
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7 comments ↓
Nice listing and a great idea about catching good listings that fall into bad buckets. The only drawback that since it did fall in a bad bucket that it would not get funded.
I am also going to use this opportunity to gripe about lenders giving advice. They will just remove any chance of making a profit here.
When they tell borrowers not to close their paid of CCs because they will lower their credit scores. As a lender I do not want my borrowers tempted with a ton of credit cards.
What got me on this tangent is the lenders comment in the Q&A of this listing:
“You should consider relisting without the auto-funding feature. It will lower your risk profile and improve your likelihood of funding.”
What the hell is he thinking? Why not suggest to raise their rate to improve likelihood of funding?
I couldn’t agree you you more… How about more interest not less…
and yes I agree good loans in bad buckets will reduce the liklyhood of funding… Thi might be a strategy for one of the large active lenders.
I agree with your pick here. If I had $50 in my Prosper account right now, I would bid on it. Right now I have exactly $48.06…hehe. I take that back: I just noticed it has already ended. This is the type of listing that falls through the cracks and that is exactly why I will never use the standing order or the portfolio plans.
“You should consider relisting without the auto-funding feature. It will lower your risk profile and improve your likelihood of funding.”
Don’t get ticked at someone for trying to do the borrower a favor. If not enough people bid because of the AF, then no one wins. He can keep his same interest rate, without the AF and get funded.
Well the borrower did relist with noAF. The borrower said in a Q&A that “choose to run the full 7 days to get a better interest rate” but they closed the listing to moment it got funded. Looks like just another desperate AF borrower. Rateladder why did you not bid on the second loan?
Well… I think I did not have $50 in cash or my SO would have.
Now that he re-listed and closed early I am no longer as gung ho about this guy…
When I thought it was a 1st listing AF I liked it a lot more. You know naive borrower and all.
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