TedErnst has lots of money in Prosper. Basically he loans out small amounts of money $20 to $50 per person, to many persons, at interest rates of around 16% or higher. Some of these will default, but others will pay back. The reason these people accept such high interest rates is that sometimes they have credit card interest rates of 30%, and bad credit, so they can’t get money from a bank. Once you accept that the credit card companies are bastards (Wikipedia:Usury), “only” asking for 16% is starting to sound ethical.
I wonder if something like that is bound by national law. It sounds like an interesting way to invest your money. Then again: How much time do you spend doing a background check on the people borrowing your money, how much money will you be earning in interest, and what kind of hourly wage does that end up as?
Perhaps I’m better off not spending time on this. 😄
#Microloans #P2P