Many people have a policy about money-they say that they will never lend money to friends or family. This is because there can be a lot of hassles and aggravations involved in dealing with getting the money back. Of course, this isn’t usually the situation with small amounts, like $5 or $10, but when it comes to larger amounts–such as thousands of dollars-people are very leery of loaning money. When a family member or close friend is getting married and needs some help paying for the wedding, many people would like to make an exception. That is, many people wish they could make an exception; however, they are still wary about putting the money out there for fear that it still won’t be repaid… even if it was used for a wedding.
This is where Prosper can help. Prosper is an online community that brings lenders and borrowers together. Loans at Prosper are repaid with interest, so a lender is compensated for the temporary use of his money.
Prosper specializes in person-to-person loans. Anyone can be a lender at Prosper. The loans originate from Prosper via WebBank.
Here’s how this can work for individuals who want to loan money to marrying couples. The lenders and the borrowers join Prosper. The borrower (meaning an individual who is part of the wedding couple) creates a listing, explaining why they are in need of the loan. Then, the family and/or friend lenders bid on the loan.
The family and/or friend lenders can name the interest rate they would like to receive. Of course, since they are close to the wedding couple, they will not likely want to charge a high interest rate; however, this is up to the individual. If, though, other lenders (besides the friend and family lenders) also bid on the loan and they offer lower interest rates, they will win the bid.
But, let’s say that a family member wins the loan bid. What happens next is that the loan money gets directly deposited into the bank account of the wedding couple within a few days.
So, what assures that the money will be paid back with loans on Prosper? How is this any different than a regular loan to a family member? Well, while the loans through Prosper are not guaranteed by the online site, there is a larger likelihood that this type of loan will be repaid simply because of the payment system that is set up.
Whenever a loan is paid out-for example, to an individual’s bank account-a system of repayment is set up where payments are automatically taken out of that same bank account on a monthly basis. So, the family member or friend will feel more comfortable with this loan, knowing that a payment plan is in place as soon as the loan is given out.
All of this means that marrying couples can use Prosper as a method through which to borrow money from friends or family-without friends or family being worried about repayment.