Thursday, August 6, 2009

How to borrow from prosper?

I must say that ever since Grameen started giving small loans to people, no other organisation has been able to replicate that except may be prosper.

What is prosper?


Proper is an organisation that link those that have money to those that needs money. In a way it is a financial intermediary but with one difference. It is not like one of those greedy banks that give loans at high interest rates and give small interest to savers. It gives the person with money control over who receives his money and at what interest rate. It also allows borrowers with good credit rating, but who have not been getting loans from banks recently, to get some decent loans at reasonable interest rate.

How to borrow from prosper?

In order to borrow from prosper i must be clear from the beginning that not everyone that are not receiving loans from the traditional banks will get it from prosper. If no body is giving you a loans it may be because you have not been paying your loans properly in the past and have a low credit rating. Prosper lends to people with credit rating 520 and above. If you have a lower credit rating you might want to improve it until you are above 520. I will write about credit rating and improving it in future post. If you qualify for prosper read on.Step 2. Complete a loan application.

You will start by filling out a form at prosper.com. You will give all your details and prosper will use these details to check your credit rating. Based on your credit rating prosper will classify you from AA - the best through E and HR (high risk). If you have a rating below 520 your application will be rejected.

Once you have been approved and registered you can now apply for loans. You will fill a form telling lenders how much you want, at what interest rate you are prepared to borrow and what you will do with the money. It is appropriate not to lie and to tell. Since many people lend after having read the application, the better your story the better your chance of getting the loan. Remember that depending on your credit rating, the interest rate at which people are prepared to lend to you will vary. So follow the table provided by prosper. If you deviate too far from the suggested rate, lenders will not lend to you.

Once you have filled your loan application, it will be listed. People will bid on portions of the loans. This is better because if you default then the loss will be shared by many lenders. This s called diversification. After 10 days if the loans have been fully funded then your loan will be approved. The interest rate will be the average of the interest rate that the lenders are offering.

After the loan has been approved the money will be credited to your account and prosper will charge a fee ranging from 1% to 2% of the loan.

After the loan has been granted you will have to pay every month the same amount for three years. If you default then it means that the last company that was prepared to lend to you is closed to you now. So be careful. Be on time.

If you have any experience to share with us or a question leave a comment below.

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Monday, August 3, 2009

How to calculate compound interest on an investment

This calculator will enable you to calculate the compound interest on an investment. This is applicable if you invest a sum of money but do not remove the interest for use. As a result you will earn interest on the interest that was earned in previous years.


This is in contrast to simple interest that you earn when you remove the interest for spending and do not allow interest to accrue on it.

Please click on "click to edit" and then enter your information.



I hope that this calculator has helped you. If you have any question or idea about any calculator leave a comment.

What is compounding?
How to calculate the interest in your loan
Fixed and variable interest.
How to calculate simple interest on an investment

Simple and compound interest

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