Is Investing in Peer-to-Peer Loans Through Prosper.com a Good Investment?

Prosper.com has been around for several years now and has recently began a significant advertising campaign, which includes running ads on CNBC and many are wondering if Prosper.com is a viable alternative investment for some of their investment dollars.

If you’re unfamiliar with the company, it’s one of a few online market places that allow individuals to lend money to another. Unlike its main competitor, Lending Club, which offers credit-score based interest rates, Prosper determines interest rates through an auction system. Lenders bid on loans and if the loan is fully funded, the lenders that bid the lowest interest rates will fund the loan to the borrower. Prosper.com does all of the work writing loan documents, collecting payments from the borrower and dispersing payments to lenders.