Changes in Advance Search
Wednesday, February 27, 2008
The first is the 'disappearance' of advanced search categories. I think the intention was to streamline the search, but many think the other columns have disappeared, they have not. Just use the new “add/remove criteria” link at the top right and a large list box will appear, from here you can select whichever criteria you want to search on.
You can call it a personalized advanced search. I wondered why the first time I saw it, but you know, there are some criteria that I just never use so to streamline the page it makes sense for them to just not be there.
On the other hand, many of the fields on that page are not used for lack of knowledge so having them there might encourage users to learn about some criteria they can filter on. My recommendation is that if you are new to Prosper, you might just want to “select all” and see all the options. More experienced users could start to remove items they are not interested in.
The second change was to add some new search criteria, they are:
- Bids from friends ($): Sum of highest single bids from the borrower’s friends
- Bids from friends (#): Total number of bids from unique friends
- Endorsements: Number of endorsements from the borrower’s verified friendsFriends: Number of verified friends the borrower has
So in fact, no advanced search criteria are missing, there are actually more to choose from.
Posted by ProsperBlogger 2:19 PM 0 comments
Labels: Prosper Tips
It’s a good idea to send late borrowers a note
Tuesday, February 19, 2008
I’m treading on thin ice because lenders on Prosper have had their accounts suspended by taking this too far so if you do contact a borrower be careful. To be safe, never contact a borrower after the loan is in default. The legal limit here is that you are not allowed to make any attempt to collect a debt on Prosper’s behalf.
The terms of service state:
You should not contact delinquent borrowers directly. Prosper has a detailed delinquency schedule for borrowers, and any additional contact you have with a borrower may expose you to civil or criminal penalties for unlicensed debt collection. The language and tone you use when collecting a debt matter are important in the eyes of the law so what you might consider reasonable may in fact be illegal. If you were to accidently[sic] break the law you'd be putting yourself, your fellow lenders, and Prosper at risk of litigation.
What this means is you are allowed to contact your borrowers if they are just late. I have done this on two occasions now, and both loans have become current. One borrower replied almost instantly with a ‘don’t worry, payment in transit’ note which was nice to read. Not only did it remind the borrower that we are people but also allayed my fears of fraud.
Here is a suggestion for a note you can send, modify it to suit your needs, but consider doing it. The more people that contact late borrowers, the more likely they are to remain current. While it might not make a big difference, small differences are significant.
Hello,
I wanted to congratulate you on your recently funded loan. I was one of the winning bidders and am glad to be of assistance in fulfilling your request. Your loans metrics and reasons met my personal criteria for risk; it would appear it did for others as well.
I am writing to urge you to keep in mind that I and the others are all individuals, not banks or institutional lenders, and we are counting on your repayment. I’ve decided to take a leap of faith; Prosper has a significant number of defaults and delinquencies, especially later in the loan cycle. This is very damaging to the lenders portfolio and has caused many to pull their money out of Prosper in search of better returns.
Prosper is an excellent resource, I personally believe very strongly in the idea of community lending and want this concept to succeed. It takes both sides to make this work so please take note of your loans late status and rectify it.
It’s good to know you can turn to your peers again in the future and I know from experience it’s much, much easier to get funded once you have had success with Prosper. Wishing you luck and a successful transaction.
Posted by ProsperBlogger 6:57 AM 1 comments
Labels: Lending, Prosper Tips
Length of Employment Has Big Impact on Default Rates
Wednesday, February 6, 2008
It appears that yes, there is certainly a correlation. At all employment levels the rate of default drops. Default rates for people employed 10+ years is less than half of the rate of people employed for less than 6 months. Generally, people employed more than 1 year have a substantially lower default rate, but the best performance are those steadily employed for the longer period of time.
Personally, I had expected a higher disparity between the length of employment ranges but there is enough evidence to support the conclusion that people employed more than 10 years are the safest risk.
For any borrowers employed more than 10 years, you should make a point of this fact in your listing.
Posted by ProsperBlogger 6:47 AM 0 comments
Labels: Lending, Prosper Tips
Borrowers Need Longer and Better Descriptions for Better Chance of Funding
Tuesday, February 5, 2008
It’s been proven that the longer the description (within reason) the better the chances of getting funded are. As lenders, we want to know what the money is for and why you feel you are qualified for the loan. While many lenders on Prosper don’t care and just look at the numbers, most don’t.
There are a few reasons a short description is a turn off. First, it appears the borrower has something to hide. Second, it appears the borrower doesn’t really care about this listing implying they don’t care about paying it back. Next, lenders want to know if you have writing skills, this may sound ridiculous but its true: when something is very badly written it demonstrates a lack of care which implies no repayment. Furthermore, lenders just want a basic idea of who someone is, the way a borrower describes their needs tells lenders a lot.
As far as better descriptions go, there is certainly room for improvement. My biggest pet peeve is the “magical thinking” listing that seems to imply an alignment of the stars or some other metaphysical event that will cause Prosper lenders to flock to a listing. This attitude implies the loan will be repaid magically as well. A good description does 4 simple things:
- Clearly describe why the loan is needed
- Clearly describe your financial situation
- Explain any marks on your credit
- Clearly describe why and how you intend to pay
Posted by ProsperBlogger 5:15 AM 0 comments
Labels: Borrowing, Prosper Tips
Prosper’s Developers Tools and Data Mining Service
Thursday, January 24, 2008
The API is a web service based interface (SOAP) that allows for querying of the Prosper marketplace. This service enables retrieving data of things such as bidding, listing information and portfolio information.
The data mining service provides complete information on all listings, bids, users and specific loans that have ever been created on Prosper. This data is available in two formats, either as a Microsoft Excel Spreadsheet and in raw XML. Prosper also has tools to import the XML data into different databases such as SQLServer, MySQL or Access.This data is useful for things such as building graphs, finding changes in the marketplace over time, and examining bidding patterns.
If you’d like to explore the Prosper developer tools, you can find the developers API here and the data export tools here.
In addition, to support developers, Prosper has a developers discussion forum and also an outlay of many different tools that have already been developed.
Posted by ProsperBlogger 11:35 AM 0 comments
Labels: Prosper Tips, Prosper Tools
Prosper Now Offers Instant Transfers
Wednesday, January 16, 2008
This is great news. Now, under certain conditions, you can transfer funds and get right to your bidding!
From the Prosper help files, describing the new feature:
When a transfer to Prosper meets certain requirements, funds are made available in a lender's Prosper account instantly, with no delay. Requirements for instant transfer:
- Transfer amount must be between $500 and $10,000
- Sum of pending transfers must be less than 20% of lender's active loan value
For example, if you had an active loan value of $10,000, you could transfer between $500 and $2,000 to your Prosper account instantly. If you attempted to transfer $3,000 to Prosper, it would not qualify for instant transfer because the amount is more than 20% of your active loan value. Your $3,000 transfer would still continue, but would be subject to the standard 4-day waiting period.
Posted by ProsperBlogger 8:31 AM 0 comments
Labels: Lending, Prosper News, Prosper Tips
Is Prosper Safe?
Monday, January 14, 2008
One question that I seem to get over and over via email thru my blog is if Proser is safe for lenders and borrowers to use. In a nutshell, yes, it is very safe.
Prosper has many safeguards for both lenders and borrowers to ensure that things like personal information is not divulged and fraud cannot take place as a result of the website. Prosper also has a community of over 500,000 members to support eachother. In the two links below, you will see a long bullet pointed list of things which show why Prosper is a safe place to borrow and lend money.
Read the links below and judge Prosper’s features and safeguards for yourself. Peer to peer lending is growing fast and Prosper represents the leading online marketplace for this service.
If you are interested in becoming a lender, Prosper makes the process of joining and funding loans very safe and easy, you can read in detail about Prosper’s features here:
One question I seem to get over and over via email is if Proser is safe for lenders and borrowers. Safe is a relative term and would have to consider their own personal level of risk and security. But as far as the service Prosper.com is concerned, yes it is safe.
Let me take a moment to mention some of Prosper’s features and safeguards, from this list you can make your own judgements.
If you are interested in borrowing money using Prosper, your identity is safe and you have complete control over your listing and eventually your loan. You can read further here:
Is Prosper safe for Borrowers?
If you would like to explore person to person lending, you can join Prosper here.Posted by ProsperBlogger 12:00 PM 1 comments
Labels: Borrowing, Lending, Prosper Tips
How to Get a Customized Signature for your Prosper Account
The signature comes in 2 different flavors, banner sized 560 x 65) and a mini banner (220 x 50).
To get the new signature, just go to this website link and enter your Prosper screen name:
http://www.ericscc.com/index.php?page=signatures
The signature will be generated, from here you can copy the code and use it wherever you’d like.
Here is mine, in mini banner format:
It will always stay updated with your latest statistics. Pretty nifty.
Posted by ProsperBlogger 9:38 AM 0 comments
Labels: Prosper Tips
When Judging a Loan, Homeownership Only Seems to Matter for HR Grade Loans
Friday, January 11, 2008
I looked at Prosper's performance data for all loans, all income ranges, and credit histories to see if there was any conclusive evidence of whether homeownership really mattered. My criteria for analyzing performance data was exactly the same, except that one set was for homeowners and the other was for non-homeowners. Statistically, default rates were virtually identical except for HR credit grades where there is almost a 7% difference in the default rates. Interesting information, and news to me.
Even at the D and E credit grades, there was no statistical difference between the default rates of homeowners and non-homeowners.
So, when considering an HR loan, homeownership is definitely something to look for, at other credit grades it does not really seem to matter.
Posted by ProsperBlogger 2:57 PM 3 comments
Labels: Lending, Proser Statistics, Prosper Tips
High number of “Inquiries in the Last 6 Months” Makes a Huge Difference
Wednesday, January 9, 2008
The reason I ignored this field is because I have seen mine at different times in my credit history and thought “where did that number come from”, implying that this number was never right. Well, sometimes it may not be correct, but it definitely has a big impact on performance.
Let’s crunch the numbers. I have focused on 4 categories, 0 to 3 inquiries, 3 to 6 inquiries, 6 to 10 inquiries and 10+ inquiries. As the inquiries go up, the return on the investment goes down.
This chart tracks the differences in percentages of defaults at the different credit grades at different levels of inquiry. The trend is obvious at every credit grade.
Now, you may look at that graph and say “they are not so far apart” but that would be wrong, they are. Defaults are the single most damaging element of lending money via Prosper, and a tiny increase in the default rate has a huge impact on how much you actually profit.
Most of these default rates are double between the 0-3 level and 10+ level. Ask any lender to double their default rate and see what they tell you. There is often the sense that too many inquiries equals desperation and the numbers certainly bear this out.
Posted by ProsperBlogger 3:09 PM 1 comments
Labels: Lending, Prosper Tips
How to Project Return on Investment (ROI) for Prosper Loans
Tuesday, January 8, 2008
Return on investment is a percentage determination of how much profit you earn from any given investment. For Prosper.com users, you can also project your year end ROI using the formula below and the Prosper.com website, to do this take the following steps:
((Daily Interest Accrual x 365) / Total Account Value) x 100
Below you can see were to get these figures in red.
Multiply your daily interest accrual by 365 days in the year, then divide it by the the total account value and then multiply that result by 100. This will give you projection of your ROI for the year. If we plugged some real numbers into this formula, we would see:
(3.00 x 365 / 5000)*100 = 21.9, or a 21.9% ROI.
To determine your own ROI, log in to your Prosper account, navigate to “Your Account”, then “Lending”, then plug the following 2 numbers into the formula above:
To find “Daily Interest Accrual”, use this value:
Posted by ProsperBlogger 6:39 AM 2 comments
Labels: Prosper Tips
How to Calculate Current Return on Investment (ROI) for Prosper Loans
Return on investment is a percentage determination of how much profit you earn from any given investment. For Prosper.com users, its relatively easy to determine ROI by using a simple formula and the Prosper.com website.
First of all, here is the formula:
(Net Gain/Total Account Value) x 100
Below you can see were to get these figures in red.
Divide your net gain by the total account value and then multiply that by 100. This will give you a snapshot of your ROI. If we plugged some real numbers into this formula, we would see:
(1000/5000)*100 = 20, or a 20% ROI.
To determine your own ROI, log in to your Prosper account, navigate to “Your Account”, then “Lending”, then plug the following 2 numbers into the formula above:
To find “Net Gain”, use this value:
To find “Total Account Value” use this value:
This gives you a current ROI, meaning what you have actually earned as of the moment you perform this calculation. It’s also possible to project your end year ROI by using this calculation.
Posted by ProsperBlogger 6:27 AM 0 comments
Labels: Prosper Tips
Complaining About your ROI? Here is a Suggestion
Monday, January 7, 2008
Too often, loans that are getting fully funded are getting bid down to very low interest rates compared to the credit history involved. I have become more and more dismayed at the loan auction format and turn more and more to automatically funded loans because of the guaranteed interest rates.
What is happening here and going wrong? Well, lenders should give up on a loan when the rate gets too low. What I do personally is bid and then allow the listing to be outbid if the rate gets too low. Well, more often than not, the rate does get bid down and that means my lending funds are sitting still too long whilst a good loan is found. Generally I don’t use rate laddering, mainly because I rarely invest too much into a single loan. Rate laddering works effectively with more than 2 bids.
So what is the solution? Fund more loans by not bidding the fully funded loans to death. There are way too many bidders on funded loans. The solution is for lenders to bid more broadly on loans that are not fully funded and stop bidding on “loans that are green” which alludes to the green bar on the funded % at 100%.
This may be hard to do. It’s tempting to want to get into a sure thing, a green bar means once the loan ends, and it will go into review and become an active loan shortly. But that temptation is short sighted when you consider the ROI you are losing out on.
Look at this simple calculation:
Take an interest rate and divide it by 72. The resulting number is how many years it will take to double your money at any given rate.
So, let’s take a loan at 20%, divided by 72 (72/20), you get 3.6 years to double your money. If the loan is bid down to 14%, then your timeframe changes to 5.15 years. That’s almost a 2 year difference. Extend that over time, and your gains will suffer significantly, much more significantly than letting your money sit idle while you wait for a good loan.
So, my suggestion (in addition to what I suggest Prosper do) is to wait for a better interest rate instead of “green bar lending”, over time it’s much more profitable when it begins to compound.
Posted by ProsperBlogger 11:35 AM 1 comments
Labels: Lending, Prosper Tips
For borrowers, fantasy interest rates just waste time
Saturday, January 5, 2008
So, let’s define terms. What is a “fantasy loan”? It’s when a registered borrower posts a loan request at or below a 5% interest rate (you can probably stretch this to 7% as it is very rare for even 7% interest rates to get funded) in the hopes that somehow the entire lending community will ignore the risks and return on investments of unsecured loans and fund a loan a well below half of the normal interest rate.
This magical thinking is more common than we might think: of the 2267 loan requests posted as of the writing of this article, 63 of them are at or below 5%. That’s 5.3% of all the listings on the Prosper website that will never even be considered for a loan. Let’s take this a step further, of the 63 loan requests, 37 of them are for E and HR credit grades! There is actually someone posting a loan at a 1% interest rate with a HR credit rating. Enough said.
Borrowers might think this has no impact, but many, after realizing that they must be competitive to get a loan funded often re-list the loan request at a more reasonable rate. Then re-list again, and again until they abandon what they think is ‘reasonable’ to what is actually ‘competitive’. Too many re-lists are damaging, just as too many inquiries in your credit report are, so keep this in mind.
For Prosper.com to work, borrowers and lenders have to come together and let the website’s marketplace determine what is a reasonable interest rate. Lenders like myself are interested in loaning money, but we also don’t want to sift through a large number of “fantasy loan” listings.
Posted by ProsperBlogger 5:43 AM 0 comments
Labels: Borrowing, Prosper Tips
Prospers "Forecast and Compare" Features
Tuesday, December 11, 2007
The "Forecast" window (July 19, 2006) shows in a graph which is darker colors represents the days which have passed and the lighter color representing the days left. If you follow the trendline, you can see the forecast for funding.
If you see a loan only a day or two in following the forecast, then there is a better chance for it's success.
The "compare" window charts the time of the loan (the red x) and compares them to other loans of similar value. An attractive interest rate changes the likelihood of the funding, so you see the trendline move up as the values of the loan also increase. The grey area in the center pinpoints where this particular loan you are looking at sits as compared to other loans.
This can be a useful way of seeing if it's an investment on target to get funded or is good value compared to other loans like it.
Posted by ProsperBlogger 12:13 PM 0 comments
Labels: Prosper Tips
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