What Types of Loans Can I Invest In on Prosper.com?

The Prosper.com loan site lists 11 different types of loans that are available. Those loans are:

Debt Consolidation

Home Improvement

Short Term & Bridge Loans

Auto & Vehicle Loans

Small Business Loans

Baby & Adoption Loans

Engagement Ring Financing

Wedding Loans

Friends & Family Loans

Green Loans

Military Loans


By far, the most common type of loan is the Debt Consolidation loan, used to pay off balances on credit cards. Remember how a few years ago, credit cards would attract business by offering a 0% balance transfer if you sign up for their card? Well, they aren't doing that anymore this is the equivalent although its clearly at a much higher rate than 0%.

This is a classic example of a debt consolidation loan request on Prosper.com:

John Doe has a good credit history with a solid credit score over 700. He pays more than the minimum each month but has been carrying a balance and eventually has seen his balance increase to $10,000. Now John has always paid on time and more than the minimum. We know this because his credit score and pay history are good. Then something changes. His credit card company increases his rate from 9% up to 22%, for no reason other than that they can.  Does John like the idea of consolidating his debt and paying 12% instead of 22%?? You bet he does.  If you are an investor in this loan, are you helping him? Without a doubt, you are.  This is the best of all worlds, investors in this loan are helping out their fellow man and making a great interest rate AND helping to stick it to the Credit Card companies.

We will go through the other loan types but I wanted to hit on the most common type first, the Debt Consolidation loan.  These loans are likely to be the foundation of your portfolio of loans on any peer to peer lending site.



About the author

Stu Stu Lustman, the author of this post, is a Credit Analyst by trade trying to bring Commercial Credit Analysis techniques to the world of Peer to Peer Lending. Check me out on Twitter, LinkedIn and Google+

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