Well let me tell you.
I joined www.prosper.com and I can tell you that it's hard. If you want a look at life from the bank's point of view, I recommend you give this a try. I'll probably cover Prosper for the next couple of days as I explore it more. Here's the quick overview. People go to Prosper to borrow money. The money comes from people who buy the loans, not a bank. People 2 People, they call it. Interesting, I call it.
Today, let me just tell you the thoughts that I went through trying to decide who to loan money to.
First, I am not risking very much money at this so that means that I have to be picky. I can't just loan money out to everyone that applies. I have to pick a couple of people and roll the dice. So, I have limited resources to throw at this.
Next are two things combined together. The return versus the probably of getting that return. How much interest are people going to pay me? Are they actually going to pay their loan? The more likely they are to pay me back, the less money I make. The less likely they are to pay me back, the more money I make if they actually pay the loan back.
So you have to decide how much risk you are willing to take and accept that interest rate or you can decide what interest rate you want and accept that amount of risk. Or you can try to do a balance act between the two.
If you have ever felt frustrated as a borrower of money, join Prosper as a lender and see what it's like from the other side.