Rate Ladder

If you used the Prosper peer-to-peer lending service in the past, you’ll be happy to know that they’ve significantly enhanced many features of the service and are now accepting new borrowers and lenders. Using Prosper is now safer and more convenient than it’s ever been, making it an even better source of alternative investment opportunities.

Improved Security

Some of the most significant improvements to the Prosper service include better security, which means lenders can feel more secure about their investments. For instance, borrowers will now be provided a range from which to choose their rate, thus lowering the odds that they are not pricing their listing properly. With this new method lenders will find prices that are commensurate with risk. Also, for borrowers seeking their first loans, they must have a credit score of at least 640. This new listings system ultimately results in better returns to lenders, since they are of generally better quality.

Specialized Auction-Like Bidding System

Prosper uses an auction-like system to match borrowers with lenders. Using such a system, lenders can exercise enhanced control over their yield. Lenders have the ability to carefully specify their bidding choices thanks to a highly active auction market and detailed credit information. The auction system now also has a solid minimum bid per listing, which keeps the possibility of a lender mispricing to a minimum.

Prosper Ratings: A Better System for Risk Rating

Prosper was instituted a new rating system called Prosper Ratings. This new and in-depth system gives them the ability to make consistent ratings of listings and provides a proportional link between the estimated loss rate and the rating. Every listing that shares a Prosper Rating will also share the same range of potential loss rates. Looking at the records shows that with a Prosper Rating between AA and B had average returns of 7.13%. These strong returns go to show that direct person-to-person lending is a feasible type of asset for investment.

Improvements to the Portfolio Plan

Browsing through the complete index of listings can be arduous work that takes up a lot of time. Fortunately, Prosper provides a way to help those who lack to time to spend hours browsing listings. Building a portfolio plan allows you to set certain conditions under which the system will automatically bid on a listing. You can construct this plan on your own, or use one of Prosper’s pre-set plans. Both types are simple to set up. Portfolio plans are powerful tools to build your portfolio and find listings that match your preferences without having to pick through them one by one.

Trading of Current Loans

There are more great new features. Thanks to the new Note Trader system, you now are able to purchase, sell or swap notes. Prosper has partnered with Folio Investing to power this new change. This gives lenders the power to liquidate their investments before the 3-year term is up. Also, notes can be bought that are linked to loans you didn’t get a chance to get in on when they were first presented. Any note that was given out after July 13, 2009 is available for trading with the Note Trader system.

• Prosper.com Lender Game — leporello Initial Update — (10.04%) to 16.61% leporello joins the game...  Here is his intro... I am a top-100 lender (most days), and think that your analysis is super. I might add that he is a fellow Princetonian and has invested $40,000 into Prosper. leporello Date Model IRR Best IRR Avg IRR 2/19/07 (10.04%) 16.61% 3.29% Date......
• Prosper.com Lender Game — Pensioner Initial Update -- 7.08% to 25.23% Pensioner is what he wants to be, it is not what he is.  He has the largest dollar amount portfolio in Prosper with a current account value of well over 800K.  He is an auditor and accountant by trade.  He is local to the San Francisco Bay Area.  In addition, he participated......
• Prosper.com Lenders Unite: Where is our Interest? First of all, I love Prosper.com.  It is a great idea (person-to-person lending, breaking the loan apart into smaller chucks to diversify, credit checks, etc.)...  BUT, that fact that a lenders money doesn't earn interest is ridiculous. Once money (it takes 4 business days) is in Prosper.com account interest is not earned. ......
• Prosper IRR Lender “Game” Feb 07 Update It is time for the February 2007 update of the IRR Lender "Game."  This is going to be more about accomplishments during the last month rather than pure calculations.  So without further ado: Highest IRR Model: RateLadder_com 12.86%  Largest IRR Model Improvement: Leporello by going from (10.04%) to (5.45%) he improved 4.59%.  Lowest IRR......
• Use Prosper.com to Repair Your Credit This blog is mostly dedicated to Prosper.com lending.  However, I think about all aspects of the process at Prosper.  Lately there have been a number of postings that list repairing credit as an ancillary benefit of borrowing on Prosper.com.  Repairing damaged credit is a critical step in reducing debt since better......

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The methodolgy or the sql for obtaining the data these curves from the private data export have already been explained in detail, but briefly…

• The Y axis is the percentage of all loans orginated of a given age that are currently 1 month late or worse…
• The X axis is the days loan origination. 
• The curves stop when there is less than 250 loans in the “bucket.”
• These curves are for all loans of a given Credit Grade.  One would get different curves (flatter slopes=better); for exmaple, if you were to choose loans with 2 or less inquires and 5 years of credit history you would see flatter slopes.

The range is 7-8% for AA all the way to ~55% for HR.  

(Click Graph for Larger Version)

Prosper Vintage Curves

• Prosper Credit Distribution Matt at Prosper Lending Review has a great article on Credit Scores on Prosper.  He goes into various details, but the bottom line is that the average credit score and distribution of credit scores on Prosper is skewed to the low end of the scale compared to the national average. In addition......
• WSJ Features ProProsper in P2P Lending Article Options Grow For Investors To Lend Online -- More Sites Join Prosper.com In Luring the Risk-Tolerant; Hammered by Late Payments...  Here is the segment on ProProsper: Over a dozen independent Web sites, mostly geared to Prosper lenders, have emerged in recent months to help lenders make better investing decisions. ProProsper.com, for example,......
• New Loan Funded — Try this one more time, group leader, wantabe borrower — $19,500 at 14.34% — AA Credit — DTI 59% A new loan funded (Try this one more time, group leader, wantabe borrower  – $19,500 at 14.34%).  I participated via my standing order RL Overlooked.  The borrower had AA credit, a 59% DTI, and is a homeowner.  This was a non autofunding loan.  As a reminder my standing orders (and manual bids) only......
• New Loan Funded — Consolidating — $25,000 at 23.00% — C Credit — DTI 39% A new loan funded (Consolidating — $25,000 at 23.00%).  I participated via my old standing order: High DTI — AF.  Which is this loan was funded as a high debt to income ratio and was an auto-funding loan.  The borrow had C credit and 39% DTI.  As a reminder my......
• Rateladder Referral Listing: deck and bills pay down deck and bills pay down This is an example of what not to do if you are an E.  First of all, an E credit borrower does not have good credit and so you are already swimming upstream so to speak. The borrower is a homeowner and a 21% DTI......

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