Prosper Update
So I’ve been ignoring my Prosper account for a while since I know it’s not looking great. Anyway, I took a look just now and it’s just about what I expected. I made a total of six loans in six different credit “grades”. One (the AA loan) was paid off very quickly and made very little interest. Two (the B and the HR “high risk”) are current in all their payments (11% and 24.85% interest respectively). Three loans have now completely defaulted and been sold to a collection agency for pennies on the dollar (the C, the E and the NC “no credit history”).
So overall it was a bust. On half of my loans I lost more than 80% of the principal. On one I got the principal back and made about 2% interest (for less than a year). Only 1/3 of my loans are paying on time/as agreed, and it’s not really the ones I expected.
I might be bad at choosing loans, and if I’d had a larger “porfolio” the loss of a few loans might have still left me in the black, but I’m not ready to put any more cash into it. So far I’m looking at a net loss of about 36% (and that assumes that my two current borrowers stay current for the next two years!). That doesn’t count the “opportunity cost” (the interest I could have made on the money by putting it into a savings account) which probably pushes it up another 4-5%.