Another Error in a National Newspaper on P2P Lending
Apparently this is fact checking Wednesday.
In the USA today is the article: peer-to-peer lending hits its stride
In this article a Prosper Lender is quoted…
Default rates are lower for peer-to-peer loans than for other consumer loans. Cory Moore became a lender on Prosper.com this year. To hedge against defaults, he spreads his risk by lending small sums to different borrowers. So far, he’s made 170 loans, for $50 apiece.
“If one defaults, I’ve lost (money for) a dinner for two,” says Moore, who says he’s collected about $4,000 in interest from the loans. “Each loan is only $50, so I’m not worried.”
Back of the napkin this can’t be right. Even using a total benefit of the doubt calculation… 170 * $50= $8,500.
$4,000 in interest for $8,500 would be an ROI of 47%. Clearly there is something off about his statement.
Reporters, please check your facts. Both Lending Club and Prosper give the data away, there is no excuse.
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For awhile it seemed that I could find at least one error in every article written about P2P lending. Recently the reports seem to be better though.