Last September I began lending on Prosper.com. It has been nine months. The average interest rate on my loans has been 18%. All are current; none have defaulted.

There is a problem, though. It is very hard to stay fully invested. The Dutch auction method of offering to lend means that you never ultimately know if you will actually lend to any specific borrower. Plus, many of the loans repay early. Even when I was paying close attention, I was never more than 80% invested. Lately I have not been paying as much attention so I am only 60% invested.

This leads to a second problem. They don't pay interest on the cash. This is of course totally outrageous, and I will never fund my account with more dollars until they do.

Otherwise, I have been pleasantly surprised that I have not had any defaults yet.


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