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Is It Better Than A Payday Loan? Social Lending Isn't What It Use to Be - Institutional Investors Move In.

Updated on May 26, 2015


May 11, 2015
I'm Free, no more Lending Club. Went to the credit union for a better rate.

September 6, 2014 (Old News)

I'm a borrower, now! 
Since Prosper closed its door to lenders I'm not longer
an active member.  Instead I've moved to Lending Club.
Lending Club will have an IPO this year.   If my memory is
correct they submitted the documentation August 27, 2014.

Since I'm in Texas I still cannot lend money (at least directly).
So I became a borrower -- got money for a different car.
Just a couple thousand.   It was quick;  8 investors approved
my loan within fifteen minutes of  active submission.

About Prosper and Lending Club Unsecured Loans

New 2015 - The two large social lending places, Prosper and Lending Club, are now dominated by institutional lenders. Is that bad? Don't know. Maybe I'm seeing the old investors pooling their money with FOLIOfn. I know the rules have changed and I feel like an outsider. As a borrower you'll see origination fees for your loan payable to a holding bank like Web Bank and the investors pay a fee to this holding bank for servicing of the loan. Note: This information is about US based social lending companies. Zopa doesn't have to deal with the SEC and the fifty US states and their money is not available to US residents.

P.S. If you want to invest and live in a state with restrictions like Texas
please research pooling funds like FOLIOfn. You should see in the right lower corner a picture and a link to information about FOLIOfn. Lending Robot maybe available for a few people in select states that don't want to be part of a fund.

-Old News from 2014--

One of the quickest ways to obtain a personal loan is through Prosper. Prosper is a place where folks may lend money to strangers.

A borrower signs up at, follows the instructions and submits a request and the lenders review the information. Note: The minimum FICO score needed to join as a borrower is 640.

At one time Prosper was an auction style social lending site but investors and borrowers preferred a fixed price process to save time plus the process is easier. That said investors can sell loans to other investors by auction.

Watch for more information on personal loans and social networks....

My Personal Experience

My experience going back to 2007 as a lender with Prosper was positive. I use to lend to families and individuals with AA to B credit rating that are eliminating their high (+20%) credit card debt. The largest exposure - $100 on an individual loan (not much). I didn't concentrate the money on one loan. Average interest rate received: 12.5% - This changes constantly as people refinance or payoff their 3 year loan.

I avoided loans from people who live in areas with high foreclosure or weakness with employment. Example: Certain areas in California, the Phoenix Arizona metro, Detroit Michigan, and pockets of Florida. (Auto industry and real estate bubble)

Note: One person filed for bankruptcy... he worked in the automotive industry (an early loan) plus had AA credit. Didn't lose too much - 50 dollars.

Other Social Lending Sites

Update! Closed: Virgin Money... owned by billionaire Richard Branson, this website concentrated on loans from friends and family. No Prosper type bidding. Had a feature: Student payback program; extensive help to repay federal and private student loans. Promotes member benefits for student loan consolidation, mortgages, mortgage refinancing, and personal loans. Open to accredited investors.

Lending Club... each borrower is given lending club interest grade ranging from A1-7.37% (best) to G5-20.11% (worst). Also, there is a borrowing processing fee based on your LC grade.

Pertuity Direct... the short and sweet; borrowers submit their application to Pertuity. Pertuity Direct decides to accept (or reject) application, plus they calculate the interest rate. The loans are pooled into a SEC regulated mutual fund. Works like a bond fund.


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    • rharper profile imageAUTHOR


      7 years ago from West Texas


      Thanks for your comments. It depends at what point the borrower defaulted in the loan process. One early default hurts. That said I didn't have much money invested.

      I bet you there's many bankers wishing they had broken even. Anyway, my state now doesn't allow individual investments in Prosper.

    • rharper profile imageAUTHOR


      9 years ago from West Texas

      More information:  The Forbes article about Prosper, the SEC, and its "quite period"... plus detailed information on other social lending groups

    • rharper profile imageAUTHOR


      9 years ago from West Texas

      Research Analyst... here's some more information about Prosper and the filing with securities authority.

    • Research Analyst profile image

      Research Analyst 

      10 years ago

      Great, Thanks!


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