Friday, October 12, 2007

A Linkfest By Any Other Name Is Just As Lazy

And into the links!

zcommodore, 36% Interest Rates?

There are rumors flying about new information provided by Chris Larsen at the Hawaii Meet & Greet that I mentioned in my last post. One of them is the possibility that Prosper will raise their rate caps to 36% from 30%.

Personally, I think this is a bad idea. If you look at my previous blog post, you will see where I mention how default rates appeared to drop significantly in the months where Prosper's rate cap was a lot lower (24%?). Additionally, when I look at the 3rd party sites at the early loans made at 30+% rates, very few of them are still current.

From the Chicago Tribune, Financing tool follows social networking:

An emerging Internet-based financing tool that brings borrowers and lenders together the way eBay links buyers and sellers is gaining momentum, turning more Main Street investors into Wall Street wannabes.

Called peer-to-peer or social lending, the concept has gotten a big boost in recent months, thanks in part to a credit crunch that has tightened traditional lending channels at the same time that online social networks like Facebook have spread the word about how such financing works.

Hindu Times, Net gain: meet money lenders online:

Zap those banks. Zap your friends and family. There are enough strangers out there on the Internet now willing to lend you money at affordable interest rates and without all those extra hidden costs that big banks build into their loans.

Social lending might be well known to most of us — we keep tapping friends and relatives for money all the time — but in the cyber world it is still a new concept. It is gaining currency as people eager to make and save money race to websites that bring lenders and borrowers together.

There's at least one happy Prosper borrower out there, and some reasonably happy lenders as well (the loan was paid back):

I have been aggressively paying my Prosper loan since July of this year. What originally was at $3,500 in June of 2006 was whittled down to $769. With the balance transfer offer that I received, I have initiated the payment that will pay off my Prosper Loan in full. I know for sure that two of my Prosper lenders stop by from time to time. I’m not sure if anyone else does. In any case, if you are reading and were one of the lenders on my loan…thank you.

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