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.
My job normally requires me to write in funny sounding languages like C# (pronounced “see-sharp”), and SQL (like the word “sequel”). I use strange acronyms like ASP.Net (ay-es-pee dot net), and slay “bugs” with electronic weapons. After a feverish two years in the Prosper engineering department, I feel out of practice writing in my native English!
Taking a moment to breathe from what has been a truly wild ride thus far, let me share a personal insight: that is that people I work with at Prosper are easily the smartest and hardest working people I have ever worked with. We simply get things done. Fast. Very fast. And I’m not one easily daunted by hard work: having served in the Israeli Air Force, instructed in a foreign language, attended medical school, and having raised three children as a single dad for several years, Prosper is an experience that rivals the demands of all of them.
Decisions have been carefully weighed. So much thought has gone into building this marketplace! Hardly a step has been taken without the benefit of extreme consideration. From the day I started, working on a make shift desk made out of a folding table (many employee’s desks are still folding tables by the way!) till today, Prosper has been about extreme thinking matched with unrelenting quality execution. We are not perfect, and of course have made our share of mistakes, but I am oh-so-proud to be a part of where this is going.
Adam Edell is a Senior Software Engineer with Prosper.com
Many years ago, it was a given that the bride’s family would take on the responsibility of paying for the wedding costs. The groom’s family generally paid for the rehearsal dinner and the honeymoon, but other than that, all other costs were usually taken care of by the family of the bride.
These days, though, things are much different. Due to inflation and financial difficulties among many families, many engaged couples must pay for at least some of their own wedding costs.
For a small number of couples, this change in how wedding costs are handled hasn’t been a big problem; these people may have solid jobs with significant incomes. But, for most couples, having to pay for their own wedding costs can be quite a burden.
And, no matter how much a couple tries to economize, wedding costs are certain to be rather sizeable. From the engagement ring to the wedding itself, from the reception to the honeymoon-all of these costs add up, regardless of how thrifty a couple tries to be.
Even if a couple decides to elope, deciding to skip conventional wedding-related events such as the rehearsal dinner, there are still some hefty costs involved. Just because you elope doesn’t mean that there isn’t a honeymoon. After all, there are still rings to be purchased-and no couple wants to buy bargain basement priced engagement and wedding rings, right?
This is where getting a loan can make great sense. Either member of the couple can get an individual personal loan for an amount that will cover the wedding costs. And, by getting a loan, the couple can afford to pay for the rising wedding costs. They can afford to have the wedding they want to have, complete with the exact decorations, food, entertainment, and honeymoon that they want. And, the couple can get the very best diamond engagement and wedding rings with which to express their love for each other.
And, these days, couples are lucky-they can join Prosper. Prosper is an online community where people can come to borrow money. This online lending community is ideal for anyone looking for a loan because it allows a borrower (such as one of the partners of a wedding couple) to choose their own loan.
To get a loan, all a person needs to do is join Prosper and create a listing. In the listing, the person tells about why he or she needs a loan-in this case, to pay for wedding costs. Then, lenders will bid to fund the loan…and all the borrower has to do is select the interest rate and wait for lenders to match it. After a few days of bidding, lenders may even get competitive and offer a better interest rate!
And here is where Prosper can really help wedding couples-after the loan bid is won, the money is directly deposited into the borrowers account within a few days. This gives instant access to the money…no waiting period, no delays.
Getting an individual online loan with Prosper can really help deal with all of the costs involved in with weddings-it’s quick, easy, and it makes sense.
Two and a half years ago, I did something that would make many personal finance gurus scream. I took out a home equity line of credit to buy a diamond ring. I put my home on the line so that I could show the woman I love that I wanted to spend forever with her.
Before we get into that decision, I want to note a few things about the diamond industry in general. The reason a diamond is worth as much as it is today is due, in part, to two things - a great marketing campaign by De Beers combined with their ability to limit production through a near monopoly. Secondly, diamonds and precious metals are two very expensive things that serve no tangible purpose for the average individual. You can’t watch American Idol on them, they don’t keep you warm in the winter, and they don’t transport you from one location to another.
If you can’t tell, I’m not really a fan of the diamond industry. So why would I go through such drastic measures as putting my home on the line to buy my girl’s engagement ring? There were a couple of factors
to consider:
As much as I hate to admit to admit it there’s a social and cultural aspect to getting engaged nowadays. When four of friends have gotten their future wives big shiny rocks, there’s no way to not
do the same without looking cheap. Put another way, because everyone else has jumped off that bridge, you are expected to as well.
It made financial sense. I knew that if we were engaged my future wife would not have a problem with moving in with me (we had discussions about moving in together in the past). However, as my girlfriend, I could see how she’d want a sign of commitment before making that big step. Moving in together saved us each quite a bit of money. My future wife could rent out her own home, covering her mortgage, condo fees, and property taxes. We would share the costs of living in one place, which reduced my mortgage payments and utility bills (especially telephone and cable television). I did the math and found that I would break even financially after about 7 months of
living together. After that we’d be saving money each month.
Taking those two factors into account, I took the plunge - a slow, calculated plunge. I went to learn everything there was to learn about buying a diamond and it took me nearly three months. I started off at the Jewelry Exchange, a national chain that promises discount prices. I found their prices to be the best that I could buy locally. I looked on Amazon which had one of the best diamond finding tools I’ve seen. I went to Costco and Blue Nile on a tip that I read in a newspaper. Those places had good prices, but not “the best” price. Here are the tips that lead my appraiser to exclaim, “I can’t buy a diamond of this quality for that price on the New York Wholesale Diamond Exchange!”:
PriceScope Forums - These are great forums and people who have no vested interest will help a new person like me learn more.
PriceScope Cut Adviser - If you have the dimensions of the diamond you can find out if it really is the great cut that a jeweler says it is. From the forums, I learned this is the most important “C” of the 4 C’s (carat, cut, clarity, and color).
PriceScope Diamond Search - The last of my PriceScope links, allows you search many diamond retailers at once and compare prices. Yes, I bought my diamond on the Internet, but I made sure the company was publicly traded and in good standing with the Better Business Bureau. I also made sure that the people in the PriceScope forums have had great experiences with the retailer in the past. If you are doing this be very, very sure to get it appraised.
Think about going with lesser color and clarity to save thousands. From a distance people notice the size, so that was important to me. The cut affects the way light reflects off the diamond and I felt that
to be very important as well. You can only notice that the diamond is of lesser color when compared to another diamond. I found that S1 clarity in many cases was a sweet spot where most people could see any imperfections with their naked eye and still cheap.
Buying a loose diamond on the Internet can save thousands, but it’s often wise to buy the ring and get it set locally. Having a local relationship with a jeweler is valuable. You may need to have the ring cleaned, polished, or serviced someday. You’ll want them to know your name.
When I was making the decision to finance my ring, a home equity line of credit got me the best rate - around a 7% interest rate at the time. While I was happy with that, I would have preferred not putting
my house on the line with a secured loan like that. Prosper wasn’t around at the time, but if it was, my good credit would have gotten an unsecured loan at 8-9%. If I had to do it again, the extra percentage point or two would have been worth it for piece of mind of knowing that my home was safe.
Is it right for you finance an engagement ring? I think you have to answer that question for yourself. One could quite easily question the decision to start off a life together in debt. On one knee, no one man ever says, “Here’s a symbol of the debt that I’m in. Would you marry me and my debt?” That said, I think there’s a happy medium to be found - and that might mean saving up money until the time is
right to propose.
—
Lazy Man has been a lender at Prosper since February 2006. He is the author of the personal finance blog, Lazy Man and Money and the health and fitness blog, Lazy Man and Health.
Last night we did one of the biggest releases of code to the Prosper site that we’ve ever done. What? You didn’t notice anything? Perfect.
One of the less glamorous sides to building web sites (or building anything, come to think of it) is that sometimes you have to stop working on the sizzle and get working on the steak. To use another analogy, someone had to frame up the canvas before Picasso could start laying down paint.
So this release is largely behind the scenes. If you’ve gotten this far, you might like to know what a few of those improvements are, so here goes…
Institutional lenders
One of the few visible changes to the site is to add an improved interface for our institutional lenders. Since the site launched over two years ago, we have had a handful of institutional lenders (hedge funds, money managers, etc.) participating on the platform. In this release we improved the account infrastructure that allows us to support institutional lenders, and hope to have many join our lender community. From the outside, however, you won’t see any differences - institutional lenders won’t appear differently than individual lenders. If you are an institutional lender who would like to participate in Prosper, please get in touch.
Credit reporting
As you probably know, Prosper reports borrower payment activity (and inactivity) to Experian and TransUnion on a monthly basis. This is important both for improving (or negatively affecting, as the case may be) borrower’s credit histories, and also for establishing Prosper as a mainstream credit provider. Our new code automates more details, which will help us continue to report accurately and in a timely manner every month, as the volume of payment activity increases.
Bankruptcy tracking
As of this release, we’re automating more of our bankruptcy tracking to set the stage for us to be able to start giving lenders the bankruptcy chapter number and filing date in the future.
Loan originations
We’ve also made some back-office improvements to our data handling process that should help us avoid delays in the pre-funding verification process.
We hope you enjoy the changes and hardly notice a thing. If you have any requests for the next release, please leave a comment.
