Person to Person Lending

Matthew Zwirner knew lending was a way to make money for his family. Timothy Shields knew he needed to borrow cash ASAP. So, both went online and found Prosper-dot-com, a website all about person to person lending OR borrowing between individuals, not a bank. In Timothy's case, he needed five-thousand dollars to jump start his campaign for village council in Wellington. "I needed a quick way to signs, brochures, and all those things", said Shields. Shields applied on-line providing a profile and credit worthiness. Since had had actually loaned money before on Prosper.com, he got the 5K pretty quickly: "people bought it", he said.

Prosper.com and other person to person lending websites such as ZOPA.com or DUCK 9.com are quickly growing in popularity. That's because borrowers who may have been turned away by banks, can find lower than average loan rates. For Zwirner, on-line lending provided him with above market interest rates; his return much higher than traditional savings or cd accounts. "Current rates average from 1 to 3% and I average 18% on my loans", he said. Zwirner says Prosper really checks out the borrowers, plus loans are typically funded by dozens of people where lenders can put in as little as 50 bucks.

Zwirner says it's the emotional part of people's stories that intrigues him the most. Folks who need loans for small business start-ups, home improvements , or even weddings. One couple needs 24-thousand dollars to have the wedding of their dreams. "You are actually helping someone better their life, you are helping them, you are also making money", said Zwirner. The most frequent borrowers? Credit card users who need to pay off their debt.

"I can't imagine why anyone would do that", says Jessica Cecere, president of Consumer Credit Counseling. Cecere says some interest rates on Prosper.com can get pretty high, depending on how desperate people are to pay off their credit cards bills. "We never suggest getting out of debt, by going into debt", she said.

This borrower and lender say it simply comes down to common sense " Is this is someone, if you'd meet them face to face, would you lend them fifty dollars?", asked Shields.