Personal Loan Portfolio

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As I promised, I have extended some loans with Prosper (although I am not quite up to $500 yet). Since everyone can see Prosper loans and which ones I bid on — see my loans at Lending Stats — I decided to have some fun with it by holding a review contest of my loans.

If you provide constructive and specific criticism/advice on 4 or more of the loans I selected (or bid on), I will enter you in a drawing for a finance book. Also, in an attempt to find more advice, if you mention my request for advice and link to this article in your blog, you can receive a second chance to win. All details at the end of the post.

Let’s move on to the the Prosper loans selected and funded each at $50. I stayed with Grades C or higher, no current delinquencies, a low number of recent inquiries, and a low total dollar amount, and DTI ratios of lower than 45%.

• $5,000 for a honeymoon trip to Europe. I don’t like that they could not save up for the trip since that is what I have done for my world travels, but the loan is small the numbers good. It funded at 10.9%.
• Grade C trying to cut down debt with a $6,000 loan. 24% DTI.
• AA with 2% DTI wanting to reinvest $5,000 in Prosper. I still think borrowing to lend is poor strategy, but it looks like he can pay the loan back regardless.
• Grade C with 23% DTI wanting $4,100 to pay off debt and buy a washer. This one has a few flags like 5 delinquencies in the last seven years and a 91% bankcard usage rate. Right now I am wondering why I funded this one, but I think I decided to go with it anyway because the total loan value is small, it had a higher interest rate, and she has good payment history on a previous Prosper loan. *Crosses fingers*
• Grade AA with 30% DTI needs $12,000 for refinancing debt.
• Grade B with 22% DTI wants to help his mom pay off a credit card with a $1,300 loan.
• Grade C with 11% DTI asks for a little help ($1,500) after Christmas. (currently pending review)

Here are the loans that I have bid on that did not fund:

• Grade C with 39% DTI needs a $6,000 loan to pay for a special education certificate. I bid 15.49% and it funded at 14%.
• Grade A with 20% DTI asked for a loan of $10K to pay off credit cards and fix the foundation. I bid 16.85% and it funded at 16.75%
• Grade A with 43% DTI requested a loan of $10,000 to purchase inventory. I bid 14.9% and it funded at 14.6%.
• Grade A with 24% DTI received a loan to pay off some university debt. It funded at 14.75% but I only bid 15.75%.

I found it fun to bid on the Prosper loans, but it was a little tedious being outbid. I had to return several times to invest. However, I think it was my fault because I started bidding just below the current bid necessary rather than the lowest I was willing to pay for the loan. I like the new rate guidance and I tried to keep the estimated return above 7.75% but a few were slightly lower.

Thanks in advance for your advice on my Prosper lending — see more Prosper advice for new lenders here. If this contest goes well, I will try it again in the future.

You can select one of the following books if you are selected at random from all the qualified answers and/or links:

• Because I think it is a fun book and in honor of the upcoming Prosper Days, I selected Freakonomics as the first book choice.
• The second option is a great book that has recently been revised — A Random Walk Down Wall Street.
• I added a book that some borrowers might be interested in: How to Get Out of Debt, Stay Out of Debt and Live Prosperously.
• I subscribe to the approach in the book The Automatic Millionaire, so it is my final selection for this contest.

Details on the advice request contest: Please provide specific advice on why you think I should not have bid on a particular loan or why you think that I should have bid lower on a loan that I bid on but did not win. Please provide feedback on at least four of the loans that is different or more detailed than anyone posting before you. The advice should be actionable for deciding on future loans. If you post that “Type X loans are more likely to default” or other justification please provide a link to the statistics proving your statements.

You can post your advice below in the comments or you may post the advice on your blog with a link back to this posting. You must provide me a valid email address when you post your comment so that I can contact you. You must respond within three days with your shipping address to my email or I will email another randomly selected winner. I will end this contest exactly 14 days after I post March 1st, 2008. You must provide advice to receive the second chance to win with the link. If you link to this post, you must either email the link to your post or it must show up in my wordpress dashboard. Only a total of two chances to win per individual are allowed. I will ship your book from Amazon via using the cheap shipping. I’ll send you the confirmation and I can’t be held responsible for shipping and handling. Additionally, you may point me to your favorite Finance Blog that has an Amazon affiliate link and I will purchase it via their link.  I will announce the winner with a link to your blog (if you have one) and a link to the finance blog you asked me to use to make the purchase via Amazon. I reserve the right to not link to any blog I decide has objectionable or completely off topic content. I will change the rules if I find it necessary to keep the game fair, but won’t jerk you around.