I knew this was coming. Earlier this year the borrower was late on a payment for the second time, so I decided to ping him with an email asking if everything was ok since he was late again. He said things were tough but he made his payment and brought his account current.
I wasn’t sure if I should send him another email once his loan started to fall seriously behind. I mean, I used to work professionally in Accounts Receivable and I HATED making collections calls. But they were darned effective. So was sending out invoices on brightly colored paper with a red rubber ‘past due’ stamp to major investment houses. You’d think places with over $100 million in assets under management could pay a $25K invoice on time, but I guess not. But I digress into the financial mismanagement of professional money managers for incidents 10 years ago. That has absolutely nothing to do with today’s current economic conditions. Nope. None.
I just wasn’t sure if I was crossing some line of etiquette in Prosper by emailing him on a personal basis to put myself and my loan at the top of his payment queue.
At any rate, due to the charge off, I’ve netted about zero returns for the total amount invested in loans. I’m up 3 cents! I’ve spent about $275 on transfers into Prosper. I’ve pulled out $30 and my remaining loans are worth $245.03. I hope the rest of the loans don’t have any further problems. So far so good, I’ve only had this one problem loan. The E grade loan is still current and none of my remaining loans have ever had a late payment.
I decided to pull out the $30 for a few reasons.
1) Prosper is in a quiet period and I don’t think new loans are being originated.
2) $30 isn’t enough for a minimum bid anyway.
3) I can add that money to my Save-O-Meter balance because I wasn’t including Prosper in that, but it is in my net worth calculations.
We shall see if I feel comfortable putting any more money into Grade A loans only after the quiet period ends. If interest rates from banks stay very low, I might go for safe 7-8% loans for kicks. (We’re still talking about potentially less than $500 total for a fun experiment in diversification and trying something new. So far, it’s cost me nothing but lost interest in other savings vehicles and things could turn around if all the remaining loans pay out without a problem.)
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this is the 2nd post out of about the 40 or so PF blogs that I read, this week, where someone has mentionned that one of their Prosper loan payees defaulted on it.. sign of a new trend?
Sorry to hear, mapgirl, but it was about to happen sooner or later. I loved the P2P lending idea when it came out and jumped right on it.
There is no way to make money on Prosper unless you spend tons of time sifting through applications, asking questions and making the right choices… After almost 2 yrs, about 10% of my money is gone… (much like you). I am breaking even
With Lending Club the story is different. After a year, I have 3.5% defaulted, which is almost double the defaults in their platform (i must be a bad loan picker). But I’m making money (around 8% returns). I’ve seen several loans go late, but turned back to current, so their collections process seems much better than prosper’s.
I haven’t tried Loanio yet.
What’s your experience with other P2P platforms?
Hi Lemons,
I don’t have much interest in any other of the P2P lenders. I gave it this one try. I don’t have a lot of money to play around with so I’m not about to spread it around. I’d rather focus on my debt.
I’m giving up on Prosper. Even though I’ve only loaned out to grade A and AA, the default rate has climbed. I now have 2 loans in default/collection. One is rated A and the other AA. Because of these losses, I’ve end up losing money after loaning through Prosper for the last 12 months.
I’m also giving up on P2P. It’s been more than a year since I last poured money down the prosper drain. I’m not going to try the other P2Ps either. Why bother when you can get 5-8% on corporate bonds?
Hi Mapgirl, I’m new to your blog but I just wanted to let you know that I also am basically giving up on Prosper. I had my first default last month and lost about 48 dollars. I have 3 other loans that are late, but I still have 30 loans that are being paid. Now that Prosper is closed (for who knows how long) I’ll be withdrawing my money as it comes in and reinvesting it elsewhere (but not P2P). I’ve added you to my reader – keep up they great work!
I too am giving up on Prosper and am trying to withdraw as my money becomes available.
Can somebody tell me what the deal is with charge-offs? They indicate that they are selling the debts to a debt-collector. Well, if so, where is my portion of the money from that sale?
I charge-off is an accounting principle saying the loan hasn’t been collected within a certain period of time, the loan isn’t forgiven just that it hasn’t been collected. The Charge off is an expense. Does anyone know how to use the charge off when doing taxes? If someone had $600.00 in interest and $200.00 in charge offs seems like they would report the $400.00 difference??
I am sorry that some of you have lost money on Prosper. It has been quite profitable for me. So far I have one charge-off, and a few late payments, but that is just a drop in the bucket compared to the number of total loans I have. I just started doing arbitrage before Prosper went into quite mode. Yes, you have to examine the listings to decide whether it is a good loan.
I would love to invest more, but the number of charge-offs/lay payments is going up. Perhaps at a later time. Until then I am withdrawing into my money market account until I find a better investment.
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