Exploring Prosper

I've written several entries about Lending Club in the past, but since they've entered their "quiet period" I can't really do much with them except watch my loan farm reap interest. The money that gets paid back just sits in a non-interest earning account since I can't reinvest it. I promised myself that if it reached $500 while Lending Club was still O.O.C. then I would give Prosper a try, and that limit has been met. Prosper is the other major contender in the world of peer to peer lending. I've avoided Prosper up until now because I had several issues with the way they do loans. It continues to amaze me that two companies who do exactly the same thing can be so different in its execution. I guess it make things interesting. To put it succinctly, Prosper is to Ebay as Lending Club is to Amazon. So in this post and some future ones I'll explore my experiences with Prosper.

Today I signed up for a membership. This took about 2 minutes, which was basically just giving them my name and email address and choosing a username and password. You activate your membership by validating your email address with an email they send you.

To actually do anything though, they need to validate your identity. The things they ask for are your name, social security number( this is for tax purposes as well) , date of birth, and drivers license number. A bank account is also necessary to transfer money to and from. Once you've given them that information, they verify your identity through Experian. After all the forms were filled in they asked me 4 multiple choice questions based on information from my credit report.

Interstingly enough, the fine print makes it clear that a "Lender" is actually purchasing promissory notes on loans made by WebBank of Utah. So you are not lending people the money directly. The loan is made by the bank and then resold through Prosper to lenders and is serviced by Prosper. The fine print also points out that the maximum amount of loans a lender can have is 5 million. It will be awhile before I reach that limit. During my account setup I took too long to read the fine print and it logged me out.  Luckily for me, it remembered all my information, so as soon as I logged back in I completed the process.

After identity verification comes bank account verification. There were two options for this, instant verification and trial deposit verification. For instant verification you provide your username and password for you bank's website as well as 3 security questions. I can only assume those are the security questions you gave your bank, and I can't remember what my were, so I elected to go with trial deposit verification.

Since trial deposits take a few days to post, that effectively ends my process for tonight. On Thursday or Friday I'll confirm my bank info and initiate a funds transfer.

See other posts in this series:

See Part 1 , See Part 2 , See Part 3 , See Part 4 , See Part 5