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A New Way To Invest : Person to Person Lending
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Advice on aquiring a personal loan
Prosper is a revolutionary peer to peer (person to person) loan concept. It basically allows individuals to be on the lending side or the borrowing side, cutting big banks out of the picture. Lenders have access to limited borrower credit information, and borrowers are allowed to follow the steps below to woo the lenders!
Below is very straight forward financial advice on how to get a loan request funded at the best rate possible per your credit band on Prosper. It is written as you the reader, are a prospective borrower.
This post will try to giving you direct input from a Lenders point of view. Remember, at the end of the day you want to create a listing that will make a Prosper Lender want to lend you money! This post will list many steps on how to achieve this, you the borrower are welcome to use all of the advice or some of it. I would recommend all points of advice being used, but also understand this can not be achieved in all circumstances.
I will give general lending advice plus specific advice situations that some borrowers will run into.
After reviewing this post, if you are planning on posting a loan on Prosper, I would be glad to review your listing description, make additional recommendations, and email it back to you.
1) You have to write a sharp detailed description of your loan request. To start off, I would first clearly state why you need the loan. Make sure that all of your whys add up to the total amount you are requesting. Make it extremely clear for the lenders.
2) Keep all comments positive in your description. Show the lenders that you believe your future is bright!
3) It is VERY important for you to portray in your description a few things:
a. Describe your ability to pay the loan back.
b. Describe the previous situation that made your credit in the state it currently is
c. Describe how you have changed your previous bad credit situation to a positive one.
d. Detail how you are going to prevent the credit situation from happening again.
e. Describe what the requested money will be used for and how this money will benefit your life and future
4) PICTURES PICTURES PICTURES add pictures – Big Smiles, Family if possible, Kids, Pets, and maybe your business logo..or a business related picture. I can not stress how important pictures are. You want the lenders to feel they have a connection with you. VERY Important – Pictures!! Try as hard as you can to get pictures on your loan. If there is not way of taking pictures, ask a friend to, if that is not possible...explain on the listing that you would have pictures, but no access to a camera.
5) Make your loan request personal! Mention your family, husband, your business. Why you love your business, how you started it, future expectations of your business, great customer experience, mention your town… house… anything that will drive a connection with a Lender. I was helping a lady who a son that was a firefighter. She mention this in her ad and and not only got funded because of it, but at a great rate. Lending Fire Fighters has seen her add and wanted to help.
6) Sometimes it helps if you can scan a paycheck, bank statement, W2 to prove to the lenders that you make as much as you say and have the ability to payback the requested money. CAUTION!! Do not let any account numbers, SSN, mothers last name, or drivers license show up in ANY form if you decide to go this route.
7) Clearly lay out your current incomes and expenses. Make it easy for a lender to see your totals by month. The more information you can give, the less they will have to think about. The more they have to think about or the more unknown the less they are willing to lend.
$1000 – 1st Job
$ 200 – 2nd Job
$ 500 – Child Support
$1700 – Total Income
$ 600 – Rent Payment (*If you own a home verify home ownership)
$ 464 – High Interest Loan (*$150 if Prosper Request funds)
$ 150 – Bills (Electric / Water / Phone)
$ 200 – Car Payment
$1314 – Total Expense
8) Make sure your Prosper Username is semi professional. Remember, the lender is lending you money and some names can frighten a lender off.
9) Explain in detail each negative point of your credit report. Honesty goes along way in the loan requests. You will be able to see the same credit points that the lender will be looking at by going through the 'borrow' section on Prosper.
a. ‘Now Delinquent’ – If you have any delinquencies please explain why / how these accounts became delinquent , why/how you will improve this, and why/how you will prevent this in the future.
b. ‘Amount Delinquent’ – What makes up this total
c. ‘Public records last 12m / 10y’ – explain this bankruptcy in detail. This is VERY scary to a lender if you are not upfront and explain.
d. Revolving credit balance: & Bankcard utilization: This section will show how well you manage your credit cards. It basically shows you what percent of your credit you are using out of total credit extended to you.
10) Debt to Income Ratio: An acceptable debt to income ratio is less than 25% in most cases. If your ratio is less than 27%, do not mention it in your Prosper ad, if it is high, you might want to talk to it. This ratio basically shows how much debt you have to how much you make. This is a huge metric used by lenders when you are buying a home and need financing. An example of this metric is if you had a debt to income ratio of 16%, it would mean you spend $16 in a month and make $100.
11) This might be the most important advice that I will give you and it will bring the most lenders to your auction. Prosper has general interest rates and dollar amounts associated with each credit line. If your initial dollar amount and interest rate do not fall near the general ones per your credit line… you loan request will never get looked at by lenders. If you create a loan request around the general amounts and interest rates, this will get lenders to pull up your request and read it… Getting the lenders to look at your request will give your loan description the opportunity to get their hearts!
I hope this peer to peer lending advice helped. I would be glad to discuss any point above or any additional questions you might have. I would be happy to review your new loan description at your convenience. Also please do not get frustrated if your first request does not get funded. Simply revise your listing, make it more eye-catching, expand your story, and possibly change up your photos.
Also, if you are interested in a borrower's template that will help you prepare for the actual loan request on Prosper please feel free to shoot me an email and I would be glad to send it over.
As always, thank you so much for reading!
Please check-out my other hubs! :)