Prosper.com: Fourteen loans and counting

Four months after joining Prosper as a lender and group leader, I'm still enjoying the personal side of it. I like reading the introductions people send me when they want to join my group. I'm fascinated by the different ways people construct their loan requests; it's like I'm watching a whole new literary form develop.

And I like watching the payments roll in on the fourteen loans I have active at the moment. Even though it's to my detriment to have borrowers pay loans off early (because then my money isn't earning interest until I can get it loaned out again), I find myself pulling for my borrowers. 'You go, Music Teacher', I think, when an especially industrious borrower makes an extra payment. 'Yay, Baltimore Real Estate Investor,' I think, when another borrower pays the loan off completely only 3 months out of the gate.

But the risks are starting to seem...riskier. My fourteen loans total $689, and return an average interest rate of 12.26%. So far, I have two borrowers make late payments. One borrower, with a C-grade credit rating, is now late for the second time (out of two payments). Another borrower, with an AA credit rating, is more than 15 days but less than 30 days late. The other loans are all ticking along smoothly.

Prosper doesn't penalize borrowers for being less than 15 days late. But it's anxiety-producing for the lender. I have one borrower who is less than 15 days late for the second time. Last time, she paid before the 15 day mark. Let's hope she does so again, and gets her act together to pay on time next month.

What's the worst that could happen? I could lose my money. I think if I have a loan go completely into default, I'll probably stop making new loans, and start transferring money back out of Prosper. That might be like closing the barn door after the horse has bolted, but psychologically, I think that's what it would take to sour me on this game. I am still hooked on the way Prosper creates an intersection between social networking and personal finance. It's appealing in the same way personal finance message boards and blogs are appealing. I guess I just don't have enough folks in my normal (non internet) life who like talking about money.

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Index to posts about Prosper.com