Prosper is the earliest P2P lending platform. However, with changes in the market over the years, investors need to know if investing in Prosper is a good idea. This Prosper review for investors addresses that question. We also look into whether Prosper is safe for you or not and all the other important information you need as an investor on the platform.
Here’s a quick breakdown of the platform:
- The historical average return for an investor on Prosper is 5.1%.
- The minimum recommended credit score for borrowers is reported to be around 640.
- The credit reports of the borrower need to be clear of bankruptcy filing for 12 months before the loan application.
- Borrowers must have less than five credit inquiries for six months before the application. They also must have a minimum of three open credit accounts.
- Repayment terms are between three to five years.
- Origination fees on Prosper range from 2.41% to 5%.
- You need at least $25 to start investing.
But is investing in Prosper a good idea for you? We’re going to help you find out with our Prosper review for investors.
Now let’s get into a bit.
How Prosper got started
Prosper was launched in 2005 as the first peer-to-peer lending marketplace in the U.S. Over the past decade and a half, Prosper processed loans worth over $17 billion to more than a million people nationwide.
How Prosper works for investors
On the investor side
To start investing with Prosper, you’ll be required to open an account with them. The process involves only a few simple steps. You must register your:
- Name/email address
- Contact info (City, state, street, phone)
- Tax information
Next, you create your custom portfolio by choosing either individual loans or using their Auto Invest tool. After investing on the platform, Prosper will deposit monthly payments from your borrowers to your Prosper account.
On the borrower side
When applying for a loan, Prosper assigns ratings from AA to E, or HR (High Risk) to borrowers. AA loans have the lowest risk of default and HR the highest.
Rates correlate with the risk level of each loan. Interest rates currently range from 7.95 percent to 36 percent. Returning borrowers have a better chance of a loan with lower APR.
Is Prosper a safe investment?
Prosper is licensed and regulated in virtually all the states it operates in. As a regulated entity, Prosper maintains a recovery fund to make payments to investors in case of a borrower default. Thus, as an investor with Prosper, you can expect a reasonable level of security.
However, it is important to remember that Prosper operates with unsecured loans. If a large number of your borrowers default, you have little more than a verbal promise you will be compensated for your funds. It may want to look into P2P platforms that secure your investment with collateral if you want true security.
Is investing in Prosper a good idea?
The pros of investing with Prosper
- The platform provides a good amount of detail about borrowers.
- Prosper only requires the investor to have 100 notes or $2,500 to be considered adequately diversified.
- There are no fixed increments for investment on the platform.
Cons of investing with Prosper
- A small pool of loans.
- Prosper loans are not secured, which increases the risks involved for you.
- Prosper is not available in every state across the U.S at the moment.
- There are restrictions for investors based on income and net worth.
- Prosper offers limited loan options to investors.
Investing in Prosper might be a good idea for you if….
To conclude our Prosper review for investors, is Prosper a reasonably safe investment? Yes. And if you are looking for steady, semi-secure growth unattached to the market then it’s a solid choice for you.
However, if you are looking for a faster solution for growing your wealth outside the normal market, you might want to check out our peer to peer platform. At MyConstant, we offer a wider range of investment products and rates for investing your money.
Our peer to peer lending service requires customers to back their loans 150% with cryptocurrencies. And our rates start at 7% APR over just a 30-day lock-in period. If this sounds interesting to you, come check out the MyConstant blog and learn what we’re all about.