I have been a Prosper lender for a year, with about $2,400 invested. Although my projected ROI is about 9%, I stopped lending in October for many reasons all linked to Prosper's management. Prosper is a wonderful concept, executed horribly due to the incompetence and arrogance of management.

There are too many serious problems with Prosper to list here, but brief review of www.prospers.org, the largest Prosper forums, will provide anyone with a long list. Here're a few:

1) The default rate on Prosper is MUCH higher than advertised.
2) Prosper’s handling of defaulted loans completely lacks transparency.
3) Prosper's collections are anemic.
4) Very little information about the borrowers is verified by Prosper.
5) Although Prosper has funded a number of fraudulent loans, it has also cancelled a number of legitimate loans, apparently through incompetence.
6) Prosper's customer service is terrible.
7) Prosper's advertising is highly misleading in many ways, if not downright fraudulent.
8) Prosper used to have a vibrant community on its official forums, with about 400,000 posts. Then, Prosper deleted its entire forum with no notice, in an effort to hide the truth from new lenders. It then replaced the old forums with a super-moderated version that is useless.
9) When another forum member made an archive of the old forums available on www.prosperreport.com, Prosper had its lawyers send a threatening letter. Undoubtedly, Prosper figured this person would cave in and take down the site. Instead, he retained a lawyer from Public Citizen. The letters are posted on the site.
(10) Prosper also misappropriated thousands of dollars of lenders' money by charging its servicing fee on loans that were more than a month late, contrary to Prosper's own legal agreements. Prosper admitted that its action was "in error," but only recently returned this money to lenders despite having promised to do so months ago.
(11) Another significant issue is whether Prosper will even survive as a company for the three-year term of its loans.
(12) Recently, a new potential legal problem has emerged -- there is a question as to whether Prosper has been illegally selling lenders unregistered securities.
The above issues are really just the tip of the iceberg. If anyone is considering lending on Prosper, do your due diligence. Read www.prospers.org, and check out the actual performance of lenders on www.lendingstats.com. For example, you will see that looking at ALL moderately seasoned lenders on Prosper (those with >20 loans and >6 month average loan age), the median projected ROI is around a mere 4.5%. This is nowhere near high enough to compensate lenders for the risks and problems with Prosper.

Clark, We purchased our forth home this past August, we had a business failure about the same time. Our credit score suffered severly and put us in the score of 550 range.
Our reality referred us to a local bank branch with Chase bank. The bank was totally illusive in the rate, etc. We did not know the rate till we were at the closing table (stupid us I guess)
We ended with 11.5% any comments/advise