If you're looking for Prosper loan reviews, then it's time to take your financial stability into your own hands with a personal loan.
Making your money work for you can take many forms. For those with high-interest debt and a bank account in the negative, thousands of dollars can be saved per year through consolidating and refinancing into lower interest personal loans.
One of the most tried and trusted ways of creating a stable financial portfolio is to invest. However, instead of investing money in stocks, many investors are finding a higher rate of return in the more stable market of peer-to-peer lending through P2P lending companies like Prosper Loan.
Everything in life costs money and having money only gives one more option. For those in the early years of life, establishing a financial groundwork may seem to be of low priority; however, for those approaching retirement, the value of financial stability is intangible.
Fewer than 40% of Americans have a financial savings plan for life events such as weddings, college, buying a home, and retirement. Peer-to-peer lending companies offer a stable way to make your money work for your future, giving one peace of mind regarding the unexpected life events, which are sure to come and which are sure to be expensive.
Prosper launched two years before the 2008 financial crash and was the very first peer-to-peer lender in the United States. Prosper personal loans range from $2000 to $35,000 and Prosper offers repayment terms of 36- and 60-month dictions along with an origination fee and operates in the model of a notary.
Since its opening, the Prosper marketplace has funded over $6 billion, servicing over two million customers in the United States from the Prosper website. Currently, Prosper offers unsecured debt consolidation loans to qualified borrowers.
Here's a brief FOX news segment where Money Mike discusses Prosper Loans:
The industry of peer-to-peer lending (or P2P), was partially induced as a response to the financial malfeasance of the 2008 financial collapse. Many people all over the world lost everything, including savings, 401k retirement funds, and even their homes.
Whereas only a year before, banks were distributing loans to borrowers with little to no credit and even bad credit; after the crash, some individuals had a nearly impossible time finding banks that would lend money to refinance mortgages in order to keep them from living on the street. Many investors became disillusioned to the volatility of market investments and thought, instead, to put their money in a more stable market, by investing in people.
Peer-to-peer lending services connect individual borrowers with loan investors who are willing to lend. Just like the bank, P2P services lend an unsecured loan to borrowers at a predetermined rate of interest. The interest rate is lower for borrowers with very good credit and higher for those with a moderate credit score.
Many areas have to be factored in by the online lender, such as debt-to-income ratio, previous debt consolidation, credit history, outstanding student loans, the loan application and loan request amount itself and so on. Investors accrue a steady rate of return from their principal loan amount, which will continue to produce a return as long as it is being lent and the interest is being paid.
Unlike loans from banks, which may be given to individuals with bad credit at a very high-interest rate, P2P lenders do not give loans to individuals with bad credit, with one of the lowest scores accepted being 600.
Borrowing From Banks And Financial Institutions
Investing is complicated. However, the basics can be easily summed up. There are two kinds of banks, which are commercial banks and investment banks.
Commercial banks are the ones you have a checking and savings account with and the ones that you get a mortgage through. Investment banks, however, are financial institutions that accrue a profit by investing in the stock market.
Through a lot of complicated math, investment banks allow individuals to gain a rate of return, through investing money that lives in stocks.
Regulated banking does not allow a commercial bank to invest its customer’s money through investment banks. When banks are deregulated, commercial banks are permitted by law to use their customer’s money to gamble on the stock market. In these instances, it behooves the banks to lend a lot of money to people easily because the increased circulation of capital stimulates the stock market.
This forms a "bubble" because this rapid expansion is based on the prospect of exponentially increasing affluence on the part of borrowers and, since the concept of exponentially increasing affluence is unsustainable, loans will inherently default.
Since the funds in an individual's savings account are now invested in stocks that back the housing market and home loans were given out like candy to stimulate the subsequent stocks, loans cannot be paid back when interest rates increase, the market collapses in on itself, and the money that once backed one's savings account, is lost forever.
The problem is that banks are put in a conflict of interest; profiting from a simulated market, and at the same time, looking out for the financial well-being of their customers.
Peer-to-peer lenders operate outside this system, by carefully vetting borrowers and lending funds from accrued interest, instead of the principal investments. As long as borrowers can pay back their loan, the investments made are stable.
Prosper Loan Requirements
Lending companies like Prosper Loan, offer borrowers a lower rate of interest on loans. To investors, they offer a higher rate of return than that of credit that has been borrowed from a traditional financial institution. This is due to two primary factors.
The first is peer-to-peer loans incorporate fewer middlemen, whose hands touch the money. The second reason is that P2P lenders operate from an online platform. This, compared to banks with physical locations and thousands of employees, greatly reduces the company's operational overhead costs, allowing them to pass savings on to borrowers and investors.
For potential loan borrowers at Prosper Loan, a fee is mandated at the time of approval, which will range from .5 to 5% of the original loans value. The “closing fee” amount will depend on the grade of the borrower in question.
A borrower at Prosper will be assigned a grade, depending on their financial history, credit score, and other factors. If investing in a loan, Prosper will charge a 1% annual fee, derived from the outstanding loan’s principle. Minimum investments with Prosper are $25.
There is one recurring offense in Prosper loan reviews that isn't great. One of the most notable complaints, against Prosper Loans, is that of unwanted and illegally marketed SPAM email campaigns. Often, these emails are marked as reading, “Second Attempt,” masquerading as a postal indicator of an undelivered check. Beyond this being a nuisance, this misrepresentation is in violation of Title 39 Chapter 1 § 141.8: Adhesive attachments and printed markings:
(b) Imitation of official markings and designs. Matter bearing decorative markings and designs, in adhesive or printed form, which imitate the markings and designs used to identify official postal services shall not be accepted for mailing.
Other than Prosper Loan, the first peer-to-peer lender in the United States, the largest lender in America is Lending Club. They are the two heavy hitters. They also are the only P2P lenders whose services are available to retail investors.
Unlike Lending Club, Prosper only employs around 100 staff members, whereas Lending Club employs over a thousand. Prosper’s lower number of employees also helps in keeping savings coming back to the investors.