Comment too much uninformed criticism (Score 1) 261
There seems to be way too much uninformed criticism about Prosper and the like. Here's a few points I would like to make:
Being able to loan money to and from people you don't even know is not that much different from buying and selling anything from people you don't know (see eBay). It's a sign of healthy financial markets, and at the very least it may force banks to lower their interest rates: applaud it!
- You get to see the credit score from Experian ScoreX (SM) credit score if you register through Prosper (you don't need to loan any money to register). And lending isn't mandatory: you get to decide how much risk you are willing to take on.
- Some people are saying, "How can you trust people to pay you back??" Well, for the same reasons that a bank would lend to those people. If you are a borrower, your Prosper loan shows up on your credit report. Late payments become part of your credit report, just like any form of credit.
- Just like any investment, there's a certain element of risk, and the amount of risk depends on the investment. There's people on Prosper who have PERFECT credit history, and have not missed a payment for 25 years. What's a safer investment: General Motors stock or that individual?
- The beauty of this system is that you, as a lender, decide how much you are willing to loan your money for. You pick the lowest interest rate you are willing to loan your money for. And the borrower decides the maximum interest rate they are willing to take this loan for.
- If you don't like banks, this is perfect for you! It lets you loan money to and from other human beings.
- Please keep in mind that there are many different kinds of people asking for money for many different kinds of reasons. There's professional real estate managers with perfect credit history who want a $25,000 loan to spruce up a house and then sell it back. There's also single mothers with horrible credit history who want a measly $1,000 to pay rent for themselves and their daughter (who happens to have leukemia) and avoid getting evicted; to make matters worse, no bank is willing to loan them any money.
Being able to loan money to and from people you don't even know is not that much different from buying and selling anything from people you don't know (see eBay). It's a sign of healthy financial markets, and at the very least it may force banks to lower their interest rates: applaud it!
