Prosper it’s all about trust is a people-to-people lending website. In other words, the site which allows you to either borrow money from strangers, either lend money to strangers.

logo_prosper.gif is currently unavailable to new lenders while it registers with the SEC. This peer lending company has completed that filing and is open to lenders.

While money is always a sensitive subject even between friends, the concept of might sound surprising - if not frightening - to anybody who would actually want to lend money. Lending money to friends is already risky enough. So lending money to strangers? How can you be sure the people you are going to lend money are trustworthy?

Lending money

To get round this understandable trust problem, found a few solutions. First, you do not directly lend money to someone. After you create your account, you have to transfer money to, which will act as an intermediate between you and the borrower.

Moreover, it is warmly recommended that you do not bid on one or two expensive loan listings - rather to bid on several small loan listings.

Before actually bidding on someone’s loan, you can browse the site and search listings by borrower credit grade, debt-to-income ratio, and other criteria. When you find some listing you want to bid on, you have to review the listing, the borrower’s history, and the borrower’s credit rating. When you made up your mind, you can enter the amount of the bid you want to do as well as the lowest possible interest rate you’re willing to accept. If you win the bid when it is over, the amount you agreed on is transfered from your Prosper account to the borrower’s. Thus a three-year loan is generated, and you will start getting monthly payments on your Prosper account including interests.

The interest rates on are pretty high, and I think this is the necessary condition people are willing to lend money to strangers, plus the fact that is the intermediate between the lender and the borrower, which is a guarantee in itself. You may feel you are talking less risks than if you were the only one dealing with the lender, obviously.
On the other hand, may sound very attractive to people who need a loan, since they do not have to face their banker.

Borrowing money

I think the question of trust is less relevant regarding the borrowers. Indeed, they don’t need to know whether the lenders are trustworthy or not since they already transfered their money to Prosper.

The only big problem with getting loans from Prosper lies within the amount of the interest rates. For example, if you are declared a High Risk loan, the interest rates can rise to 24.56%! is fairer if you have a good credit grade, in spite of the interest rates still being relatively expensive regarding to a classical bank loan.

Other websites

This kind of intermediate money system can also be found on, which was originally created by eBay in order to safely send money through the Internet without any risk since PayPal offers fraud prevention and security tools. In a nutshell, PayPal refunds you if you do not get your eBay item after payement.

Paypal offers extra security for debit and credit cards. When you make a PayPal payment, your card number are not revealed.

To sum up…

Trust is definitely an important value on the Internet since e-commerce transactions have exploded the last five years. Websites that offer services dealing with money have to set themselves as trusted third-parties. Customers do not naturally trust sellers, as lenders do not naturally trust borrowers; but they trust the trademark of the website they are dealing on.

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