Thursday, June 1, 2006
More Bang for Your Buck: Prosper
If you've ever applied for a loan, you know most banks don't easily budge. But there may be new life for findng a lender - even if you have bad credit. In tonight's More Bang For Your Buck, we found a program that brings strangers together to borrow money
WSVN--There's one word Mike Trottier never likes hearing from a bank.
Mike Trottier: "Denied. Denied."
But with debt dating back to college, he isn't surprised either.
Mike Trottier: "It's hard to go to bank and say Hey can I have some money, I'm a good person, but here's my credit score."
Since the bank won't approve him, he's testing a new website called Prosper.com.
Made popular in Europe, it is a service designed to connect borrowers with lenders.
Ernie Hartman: "If you can't get loans in other traditional places, this might be the place to go and get some money.
The way it works is all loans are for 3 years, maximum $25,000.
To begin - borrowers must post a profile listing their credit rating, how much they need, what they money is intended for, and the interest rate they're willing to pay back.
Lenders can then pick who they want to do business with and who they trust.
Ernie Hartman: "The more you can learn about a borrrower, the better off you are."
Accountant Ernie Hartman thinks prosper has great potential.
His only concern is there are no guarantees the lender will ever be paid back.... which is why people like jorge guerra jr are very selective.
Jorge: "Prosper does a great job at doing their research on their end user. They will check out their credit score and check out their debt to income ratio."
As a lender, Jorge looks at prosper as an easy way to capture a higher return on his money.
Plus he knows if a borrower defaults, prosper has three collections agencies on stand-by.
Jorge: "There's no better feeling than lending out your money, making a great deal, getting a great return on your money, and getting a thank you note saying thank you."
Mike's still hoping to land a loan soon.
He thinks if he can find enough funding, he can pay off his credit cards and maybe buy a home some day soon.
Mike Trottier: "You're in the market place selling yourself. Saying can someone believe in me. Can someone take that next step with me and give me a little bit of cash."
All transactions on Prosper are electronic. Both borrower and lender can remain anonymous if they wish.
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