Meet A member Of Your Loan Approval Team

Meet A member Of Your Loan Approval Team was Originally Posted on October 25, 2013 by lavarock

Commercials just started on CNN, ESPN and Bloomberg about a
way to reduce your costs for loans. Let’ say you have credit card debt
at 21%. If your credit is pretty good, you can reduce that rate even if
the regular bank won’t touch you.

Prosper is a P-to-P (Person to Person loan system which operates much
like a credit union. On the borrowing side you submit an application
for a loan, they check your credit score and rate you based upon a
number of criteria and assign a rate to your loan. Investors (the loan
committee) look at all the loan applications (your personal information
is NOT shown to investors, just credit score and number of
delinquencies and so on) and each member decided if they will invest in
your loan or not. If enough people decided to fund your loan, you get
the money.

Many people are consolidating their bills and credit card
charges for a lower cost loan. It must feel great to pay a big chunk of
credit card debt off at a discounted rate

When you get a loan and start making payments, the payment
information also gets reported to the credit bureaus, making it easier
to bring up a credit score.

On the lending side, as I said, personal information is not
available to the lenders, only generic numbers and scores. Only once
that I saw was it possible to determine who was the borrower and they
purposely added their business website address so people could see the
business they were investing in. Lenders pick and choose investment
loans or have the system automatically pick loans to invest in.

Terms for the loans are now 3 or 5 years and rates depend upon
scores determined. There is a simple calculator that will let you know
what the rate might be.

So who are these lenders? Me for one! Although I don’t yet
have a lot of money invested, I am moving more over to Prosper.Com as
another way to invest. As with any investment you weigh profit over
risk. I have some money in funds that have gained .2 percent since I
owned them. At prosper I am making just under 9% per year and I don’t
think the risk is very high. I pick the loans I like and by investing a
little money in a lot of loans, I minimize my risks. I think the
minimum investment in any loan is $25, so starting with $100 or $200 as
an investor is a great way to dip your toes in and see how it works.

If you have money in a savings account getting less than 1%
interest, why not mavbe just a little over to a company like Prosper
and try to get a bit more. In my case, if I had my money in a bank
paying 1% compared to Prosper where I get 9%, I would be paying the
bank 8% just to hold my money. I can hold it for 8%. Think about it.

Your money is not all tied up forever with these loans; here
is how it works. Let’s say you invest $300 and put $50 each into 6
loans. If all loans get funded, within a couple months, as those loans
start to get paid, your part of the payment gets redeposited into your
account. Thus each month these people with the loans are paying each of
the lenders and Prosper takes their small slice of the pie. If someone
pays more than is due, you get even more money back. You can reinvest
that money in new loans or take it out.

Should you decide to get out completely for some unforseen
reason, it is possible to sell the note you hold, however like a CD
withdrawn early, there is a small loss you might suffer. I would not
invest money in Prosper that you might need soon, however it is yet
another place to invest and spread your risk around.

A good investor has some money in very safe places, real
estate, CD’s, stocks, mutual funds and so on. The mix of those
investments changes over time and as you get older the suggestions are
to minimize your risk and start investing in more “tame” investments.
You could invest in Twitter stock and take a chance like people did
with Facebook. I think Facebook investors finally are seeing a profit.
You could leave your money in a bank at essentially NO interest. I
think Prosper is a good place in the middle.

There are those who rack up debt (especially on credit cards)
and then walk away with a bankruptcy. With Prosper I think they have
already decided not to default and are trying to pay down their debt
with a lower rate. They are trying to get a better credit score and pay
off debt cheaper.

That is why I am a Prosper lender. I have helped a business
buy a refrigerated truck to get their farm products to the consumers in
town. Also, I have helped a couple of businesses buy needed inventory
and have helped a number of people reduce horribly high credit card
payments with lower ones.

Knock on wood, but in over 21 loans, not one late payment or default.
One guy paid off his loan way too quickly, but I’m sure his credit
score went up by getting a loan and paying it off quickly. More power
to him!