I'll share. I had to weather the bad storm like most creditors. I've had nine notes paid in full but seven notes were charged off. I kept reinvesting the paid back funds and my return for this entire time frame....
$6.15 - Gain.
Not a loss, but certainly not worth the time for that gain. I've been withdrawing funds as they get paid back and become available. I have $52 left at Prosper. As I noted above, I've never lost a cent at Kiva.org. I keep reinvesting my money there. I've made 27 loans and had them all paid back.
Well this is the Prosper.com - 3 year later edition. The last of my loans is either paid off or gone to collections.
While there was a lot to knock, I've personally found it an incredible little experiment. I'm very tempted to try it again, not so much for the returns, but just because of the wonderful data it provided me.
So I started with $1000. I ended up with $1,008.31. I said at the beginning I was taking the initial returns from the high risk loans and rolling it into lower risk loans. The returned capital could immediately be re-loaned, just like banks. The total amount of capital used to purchase notes, aka returned principle plus interest payments was $1,307.31. I had $271.56 paid back in excess of principle but $263.25 in principle loss due to bad loans.
While the gain was very VERY small, it was still better than most investments did during this time.
There were 20 loans in total. 12 of them paid in full.
The "grades" of those loans in terms of Prosper assigned credit score were as follows:
AA, C, AA, A, AA, B, AA, AA, A, A, AA, E.
Of the 20 loans, 8 of them went to collections and defaulted.
The "grades" of those loans in terms of Prosper assigned credit score were as follows:
C, HR, A, E, HR, B, E, E.
There were exceptions as you see but for the most part, people followed their "rule" with regard to acting as their credit score. The one "A" grade had two people working in the commercial real estate industry and upon reflection clearly were overextended even if their grade didn't reflect it. The "B" charge off was from buying a home. Again in hindsight, easy to see the risk factors there and I doubt with today's standards either loan would have received those grades. Borrowing downpayments or borrowing to either create a second mortgage or pay off second mortgages (both of those loans) clearly is not "A" level credit in 2010 terms.
As a school teacher, I've had ridiculously similar results in classes, almost terrifyingly so. I've had classes where kids have 50 grades in a trimester and 100 grades in a trimester. Their performance is terrifyingly consistent for the most part.
My experiment was micro, but the macro implications are pretty bad when thinking in terms of society or perhaps even sovereign debt.
Comments
$6.15 - Gain.
Not a loss, but certainly not worth the time for that gain. I've been withdrawing funds as they get paid back and become available. I have $52 left at Prosper. As I noted above, I've never lost a cent at Kiva.org. I keep reinvesting my money there. I've made 27 loans and had them all paid back.
I read a headline that suggested that micro-finance create inflation in some markets. It makes sense. Unintended consequence.
Why...greater availability of capital?
While there was a lot to knock, I've personally found it an incredible little experiment. I'm very tempted to try it again, not so much for the returns, but just because of the wonderful data it provided me.
So I started with $1000. I ended up with $1,008.31. I said at the beginning I was taking the initial returns from the high risk loans and rolling it into lower risk loans. The returned capital could immediately be re-loaned, just like banks. The total amount of capital used to purchase notes, aka returned principle plus interest payments was $1,307.31. I had $271.56 paid back in excess of principle but $263.25 in principle loss due to bad loans.
While the gain was very VERY small, it was still better than most investments did during this time.
There were 20 loans in total. 12 of them paid in full.
The "grades" of those loans in terms of Prosper assigned credit score were as follows:
AA, C, AA, A, AA, B, AA, AA, A, A, AA, E.
Of the 20 loans, 8 of them went to collections and defaulted.
The "grades" of those loans in terms of Prosper assigned credit score were as follows:
C, HR, A, E, HR, B, E, E.
There were exceptions as you see but for the most part, people followed their "rule" with regard to acting as their credit score. The one "A" grade had two people working in the commercial real estate industry and upon reflection clearly were overextended even if their grade didn't reflect it. The "B" charge off was from buying a home. Again in hindsight, easy to see the risk factors there and I doubt with today's standards either loan would have received those grades. Borrowing downpayments or borrowing to either create a second mortgage or pay off second mortgages (both of those loans) clearly is not "A" level credit in 2010 terms.
As a school teacher, I've had ridiculously similar results in classes, almost terrifyingly so. I've had classes where kids have 50 grades in a trimester and 100 grades in a trimester. Their performance is terrifyingly consistent for the most part.
My experiment was micro, but the macro implications are pretty bad when thinking in terms of society or perhaps even sovereign debt.