Article: Prosper: The eBay of Loans?

I spent a few hours on Saturday reading and understanding how Prosper works. It’s pretty interesting! It’s something of an eBay for person-to-person loans. Say you need money for a car downpayment or home improvements or debt consolidation. You create a listing on the site with how much you need and the max interest rate you’re willing to pay. Prosper has already run your credit (classified from AA to High Risk) and determined your debt-to-income ratio, and posts that information in your listing.

Lenders can peruse the current listings and bid on loans they’d like to fund. You don’t have to (and probably shouldn’t!) fund an entire loan request… instead, bid a nominal amount (as little as $50) and let other people bid so that the risk is shared amongst many lenders.

After receiving a loan, borrowers make payments to prosper.com, who then makes payments to you.

I think this model will be big once more people find out about it.