My Prosper.com Experience
Failure should be our teacher, not our undertaker. Failure is delay, not defeat. It is a temporary detour, not a dead end. Failure is something we can avoid only by saying nothing, doing nothing, and being nothing.
~ Denis Waitl ~
Since I started this journey of financial enlightenment, I have looked for ways to consolidate my high interest debt into a lower rate. As it stands I currently cannot qualify for any credit card that is worth having – low limits, high interest rates, fees on top of fees and the systematic throttling by every card I hold has kept me at a standstill. Progress is slow and frustrating and there have been many setbacks. Every time I get $500 in my emergency fund it is needed for “something”, mostly car repairs. Then add into the mix the price of gas and my 36 mile one way commute and its pure disaster. So at the 7-month mark I feel no better off than I was when I began all this in January. But that is not entirely true. I have caught up all but one of my lagging payments, paid off two very small credit cards, about $1000 combined, and that for me is a small victory. But the problems continue. Right now, each and every one of the cc’s I hold has raised my interest rates, and lowered my available credit to just above or just below my current balance on each card. This makes my credit report look like I am maxed out on every card. But when you owe 2100 on a card with a balance of $5000, then they lower my limit to $2200, times 5 cards is making my score drop like a lead balloon. Then the card companies pull the credit react to the changes, dropping my score even lower and begin the process again. It’s a vicious cycle. I wish I did not have to deal with them, but for now, there are few alternatives if you are not a homeowner, even that might not get you any relief.
Since I started reading personal finance blogs I keep hearing a lot about peer-to-peer lending. Prosper.com, Lending Club, Zopa.com are all P2P lenders in one form or another. I like the grass-roots notion of taking the loan process back to the people so I decided to check them out.
Lending Club is not currently accepting new applicants and there is no timeline for them to resume business.
My credit score is too low for Zopa, so that was a dead end for me.
I went to Prosper’s site and had a look around. Signing up was pretty easy. Getting verified was rather annoying. I was asked for the same items over and over again. Even though I sent .pdf scans of the requested items they for some reason could not be opened or read. I had to fax things and there was no alternative to faxing (my workplace records all faxes sent out and we have to put in a password to use the fax machine) So I ended up having to pay to have items faxed over and over again. They would not accept my passport as a valid ID. They would not accept my pay ordinance (which is a legal contract) as verification of my employment. But in the end I got verified. I am glad that they make a painstaking effort to verify your information. It may be anal, but perhaps that is why they are so successful.
Prosper is a bit like ebay in that you list your request for a loan, people bid on it, and it either funds or it doesn’t. In all, I listed 4 times before I got a loan funded. I had hoped that by getting a lower interest loan I could make some actual progress in paying off my debt.
In the first listing I asked for $2500.00, probably too much for a first time borrower. Even though I read the tutorials and looked to other people’s ads in similar predicaments, I was still in a learning curve. The listing ran for a week and got 4 bids. I didn’t go too much in detail, tried to be honest, short and sweet but it didn’t get the job done.
The second and and third listing I asked for $7500. I jumped up the amount of the loan because again, I was trying to make a serious dent in the interest rates I was paying. I expanded my information, pretty much laying everything on the line in the hopes of something coming of it. But for a first time loan, it was too much to ask for with the credit rating I had. I got one bid.
For the fourth listing I decided that I would just experiment. This time I listed for the $1000 loan minimum. It funded easily but the amount is so small it really only bailed me out of a short-term crisis and did nothing to help toward my real debt. So for now, I am paying the loan, paying extra each month. I plan to pay it off in 6-9 months. I think I have to wait 9 months before I can list for another loan that might actually help me. I am also hoping to demonstrate my ability to pay my bills, keep my promises and establish a history with Prosper.
I feel that my overall experience with Prosper is positive. I believe in what they are trying to do. I have no regrets going down this path as nothing worth attaining comes easily.
