Has anyone actually made money lending at Prosper.com?

Question

I am thinking about lending about $5000 to people in need. Is it possible I could double it within 6 months or is it not worth the risk?????

I am thinking about lending it to people with low scores at over 20% interest.

Answer 1

No. You won't double it. Doubling your money in 6 months means an interest rate of 200%. Also, all Prosper loans have a 3 year amort. In the unlikely event that none of the loans defaults, you may break even sometime in year 2.

If you only lend to people with bad credit, you may not make any money at all. People who have bad credit have bad credit for a reason: They don't pay their bills. I made about 20 low credit loans on Prosper and 7 or 8 have defaulted.

The next time I invest in Prosper, I will only do good credit loans. I would rather make 10% with little or no risk than 20% with very high risk.

Answer 2

People in need don't need 20% interest loans. That's akin to payday cash stores. Anyone crazy enough to sign up for a loan like this probably has so little money skills that they'll never pay you back because they'll be too busy buying candy and pizza with it instead of taking care of bills.