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If  you have a poor credit score, it is difficult to get a loan from most banks and financial institutions. Credit is usually available only at a very high interest rate. Prosper is an online auction marketplace, where borrowers can post their loan requirement and lenders can lend money at the rate they specify. This website was started in February 2006, and  is based in Texas, USA.

A borrower signs up at  Prosper and creates a profile with some background information. The borrower can list the loan amount and the maximum interest rate he/she is willing to pay. The minimum loan amount is $1000, though some states have a higher minimum amount.

 

 The borrower is rated for creditworthiness using Experian's Score X  when  the loan request is created. The maximum interest rate a borrower can pay is capped according to the usury laws of the state in which the borrower resides. In certain states like Ohio, the interest rate is capped at 8%, so few residents qualify for a loan.

 

After a loan request is posted, lenders can bid for a loan. The minimum bid amount is $50. The lenders bid for a loan based on the borrower's profile,  credit rating and the interest rate the borrower is willing to pay.  If enough lenders bid for the loan, so that the total loan amount is funded, the amount is withdrawn by Prosper from the lenders bank account and deposited in the borrowers account.

 

The loan amount is repaid over a period of  three years. Prosper charges a one time fee from borrowers when the loan is  funded and an annual fee from lenders (the loan givers). In case the borrower defaults, the lenders lose their money.  Both lenders and borrowed must reside in USA. Most lenders will give small amounts and some may consider it charity but may borrowers find it useful for getting small loans. How to increase your chances of  getting a loan at Prosper

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