Experience with Lending Club & Prosper.com
A few months ago, I gave away a few Kiva Gift Certificates — one via this blog, one via Twitter, and one via Facebook. I wanted to share with you where they went.
Tom at Prosper Lending Review used the first Kiva Certificate. He selected a loan for a restaurant owner in [Read more...]
I am following up on posting the second certificate for Kiva.org that I promised to give away via Twitter a few weeks ago. See that page for more information on Kiva or go to the Kiva.org website.
Unfortunately, this is first come, first served, and only the first person will be served because there is only one code to be used.
Why am I doing this? Because I want to promote Kiva.org — it fits with me personally as a former Peace Corps Business Development volunteer. By the way, Kiva has has recently seen phenomenal success and been nominated for a Crunchie.
Here is the link for the free $25 gift certificate: CERTIFICATE HAS ALREADY BEEN REDEEMED
Please comment on this post or tweet me when you have used the certificate so that I can update this page. I’ll update this page as soon as I am informed that the certificate is used, but can’t guarantee that that if you still see the above link that it has not been used. If you tried to use it and it failed, you might also leave me a quick note in case the person who used it failed to let me know.
If you are new to peer to peer lending, my website covers the companies facilitating peer-to-peer lending and advice for P2P lending. For example, I collected advice from several other bloggers before starting to lending and I have posted some tutorial videos.
If you are more interested in an investment for your money than the international development microlending opportunities of Kiva.org, I recommend signing up with Lending Club to try out P2P lending. I have had better returns with Lending Club than Prosper (besides Prosper is in a quiet period). Lending Club is easy to use and you can sell you notes on the secondary market if you need to cash out.
By the way, I will be posting updated return information on both my Prosper Marketplace and Lending Club return on investment next week. Also, I will post a few more Kiva gift certificates throughout the year both via twitter and my regular blog posts, so stay subscribed if you are interested in trying Kiva.org for free.
This is a first time experiment so we’ll just have to see how this goes. No warranties/promises.
There are two great ways that you can support peer to peer lending with a simple mouse click.
1) Vote for Kiva.org — the micro lending site for entrepreneurs in the developing world in the Crunchies which are a major web award. Vote at the 2008 crunchies website under the category of most likely to make the world a better place.
2) Vote for Uncrunch America at Change.org which is being sponsored by Lending Club. Uncrunch America is a newly formed NGO that has been submitted to help change America using the voting system on Change.org. It is based upon the idea that there is lots of money available but hoarded and lots of people in need of money. The top three ideas will be moved to a second round of voting for a runoff election. The the overall top 10 ideas for changing America will be presented to the new administration on Inauguration Day.
About Uncrunch America from Change.org: [Read more...]
For Christmas I posted the free Kiva gift certificate. Tom from Prospser Lending Review redeemed it, but there are no loans open on Kiva right now for him to use the certificate.
From the scrolling banner on Kiva’s site about the impact that Kiva lenders have made this week:
$1,005,000.00 lent.
12,817 lenders made a loan.
17,329 gift certificates purchased.
15,002 new lenders joined.
2,874 entrepreneurs funded.
1 loan was made every 25 seconds.
AMAZING!
I also gave a certificate away on Facebook and my friend redeemed it for this loan:
Mr. Yous Ba Try, 35, is married and lives with his wife and a ten year-old child in a part of Phnom Penh, Cambodia. He is the head of the family and works as a sculptor designing and making Buddha statues and historical statues from cement and will then sell up for a profit. From his business activity he can … Read More moderately make $3 a day of income. Moreover, his wife, Lay Sarorn has a business at home washing motor-bikes and vehicles and makes $3 a day of income.
Yous Ba Try would like to ask for a loan from Kiva to purchase more cement to expand his business. Half of the loan will be used to fix a roof of the building where his wife has her business.
Congratulations Kiva on your great year. To date Kiva has facilitated over $54 million in micro loans to entrepreneurs in the developing world.
For more about Kiva’s outstanding year, see the Kiva year end review blog post.
Another Gift Certificate Give Away:
I’ll be giving away another gift certificate via Twiter. I am certain that Kiva will have more loans to fund shortly.
Last year MySpace Founder Chris DeWolfe gave away Kiva.org gift certificates to his employees as a Christmas presents. I noticed Tim Ferris gave away a gift certificate via Twitter. I decided to do the same but with Kiva.org the micro lending site gift certificates.
I am giving away one certificate via my blog with this posting, one via facebook, and one via twitter. I’ll be giving away another certificate via twitter in the next few days so follow me on twitter. I added a $20 donation to Kiva on top of the gift certificates to cover the operations for the loans, so don’t feel obligated to add the service fees that they might ask you to donate when using this certificate for the loan.
From the Kiva website:
Kiva (www.kiva.org) [is] a non-profit that allows you to lend as little as $25 to a specific low-income entrepreneur in the developing world.
You choose who to lend to – whether a baker in Afghanistan, a goat herder in Uganda, a farmer in Peru, a restaurateur in Cambodia, or a … Read Moretailor in Iraq – and as they repay their loan, you get your money back. It’s a powerful and sustainable way to empower someone right now to lift themselves out of poverty.
Below is the certificate. All I ask [Read more...]
I have been fascinated with Kiva.org for sometime but have not jumped into lending on the concept yet. Part of my hesitancy is that I feel awkward about earning a return on these micro-loans for international development. I do not see them fitting with my goal of trying to offer a higher return, but as a former Peace Corps volunteer I am excited about the concept of micro-finance and would like to participate.
Therefore, I am sending the following note to Kiva.org: [Read more...]
I participated in the second peer to peer lending carnival which is hosted at Brip Blap. There were too many good submissions to decide on a favorite post in this carnival, but I will post links and comments below to a few favorites. I submitted my article on Lending Club rejecting most loan applications.
Peer-Lend posted information on the new bidding guidance and interest rates. Moolanomy posted information about his second loan on Prosper. Prosper Lending Review interviewed the Fynanz CEO. (That one was interesting enough that I already blogged about it.) Rate Ladder updated the vintage curves.
WiseClerk make some P2P lending predictions for 2008. One of his predictions (listed at 75% probability) [Read more...]
Thank you for reading my first two months of blogging P2P lending. During this time, I have written 37 articles on P2P lending as I have shared my experience and learnings about peer-to-peer lending.
I would like to thank all the bloggers who have linked to my posts and added me to their blog roll. P2P No Bank Aggregator (managed by Rate Ladder) has provided a some traffic and makes it easy to break into the P2P lending blogging scene and to keep up with other blogs. Lazy Man and Money also sent many users my direction with the first Peer to Peer Lending Carnival. My MicroFinance (link removed 3/5/2008 because blog now MIA) was the first to add my blog to his blog roll. Other blogs have followed such as Prosper Lending Review and I have received a few mentions in the official Lending Club Blog such as this announcement. Wise Clerk also linked to several of my posts. I am certain that I missed some more bloggers, but I cannot remember all the links at this time.
Bloggers also helped create the content for my most popular post to date “Advice for New Prosper and Lending Club Lenders.”
Also, thanks to Lending Club which has already paid out [Read more...]
Glenn Chapman wrote an article about P2P lending which can be found at Yahoo.com News. Included in the article were Prosper.com, Virgin Money, Kiva, and Zopa. Below are a few excerpts from Glenn Chapman’s article and my comments. Glenn Chapman begins the rehashed material article with a great feel-good tag line:
The Internet is directly connecting investors and borrowers, letting them take banks out of the lending equation and put their money where their hearts and dreams are.
Never mind the details that Zopa is actually adding a layer of bureaucracy between the bank of the people involved rather than removing it in its US based model:
Zopa feels US investors are steering clear of risk so, in contrast to its London-based service, the firm guarantees lenders will get their money back. Lenders at Zopa put their money into the equivalent of certificates of deposit, selecting borrowers they want to direct funds to and picking interest rates from pre-set ranges. Zopa banks on its borrower-screening savvy to minimize losses.
On to the Prosper.com information listed in the article because this was my reason for posting about Glenn Chapman’s article in the first place…
If a Prosper borrower fails to pay back a loan the default is reported to credit agencies and eventually sold to collection agencies. The default rate on Prosper loans is a meager three percent.
There are several items related to Prosper.com that people complain about 1) censorship (see my article on Prosper editing Wikipedia and the comments at the WSJ) 2) poor collections (link to one of Prosper’s Top Lenders Collections Issues) and 3) the default rate is higher than expected and advertised.
Prosper claims the default rate is 3% which is only technically true by the Prosper.com definition of a default and includes all loans — even very recent ones. The 3% default figure does not take into account that the average three-year loan is only less than one year old. Prosper statistics on Lending Stats can easily prove this. Take a look at the below graph generated from LendingStats.com:
Prosper’s statistics are technically correct per their definition — less than 3% of Prosper loans have been put in the status of “defaulted.” However, for a Prosper loan to go into default, it must be more than 4 months late and only once per quarter are all loans which are more than four months late are classified as defaulted.
Considering that the average age of a loan listed currently at Prosper is only 284 days (approximately 9.5 months) and that it takes four or more months to be considered in default, there are many more loans that are going to default in the near future. See this prosper statistics page which shows default rates on loans originated in the first several months of the site to be in excess of 20%. That is right, the default rate is probably going to actually be more than 20% after three years. A default rate of 1 in 5 loans is horrible. Banks would be out of business, but Prosper does not share in the risk only the people lending.
How Many Prosper Loans are Late? [Read more...]
Wiseclerk mentioned the fighting over the Wikipedia article on Prosper. (The disagreement can be seen on the Wikipedia talk page. ) This reminded me of the wikipedia scanner. The wikipedia scanner checks Wikipedia edits versus the IP address of the editor and looks up the domain to find out possibly what company or governemnt agency made the change. Some interesting examples of Wikipedia Scanner usage include:
So what did Wikipedia users with Prosper Marketplace IP addresses edit on the Prosper wikipedia page? [Read more...]
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