With dishonest loan sharks and adjustable rate mortgages running rampant in today’s financial arena, Prosper offers a common sense loan alternative. Prosper is a consumer lending process designed to make the process financially and socially rewarding for both prospective borrowers and lenders.

Much like eBay, on Prosper people list and bid on loans using the website’s online auction platform. Borrowers post a listing with the amount of money they want to borrow and the interest rate they can afford to pay. Lenders will bid down the rate by bidding the amount they are willing to lend at a rate they believe is fair. Bidding is done in increments of $50 to $25,000. At the end of the listing, the bids with the lowest rates are combined into a single three—year loan. The loan payment is deducted from the borrower’s bank account and deposited into the lenders’ accounts until the loan is paid off.

Prosper boasts that they have a rigid privacy policy and use state of the art identify verifcation systems, making the lending process secure. Prosper earns money by collecting a 1 or 2 percent fee on funded loans from borrowers and 0.5 percent or 1percent per annum loan servicing fee to lenders. To date, Prosper has raised $40 million and is backed by several major players, including Benchmark Capital and Fidelity Ventures.

If you are looking for an alternative to high interest credit cards, fee intensive pay day loans and unscrupulous loan shark and mortgage brokers, Prosper seems to offer a safe loan alternative for borrowers. For people looking to make money on their savings, extending a loan through Prosper is an excellent way to earn passive income by simply lending your own cash.

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