Last September, I took out a $10,000 home improvement loan on Prosper, to fix a leaky patio that I inherited when I bought my apartment. It was a known repair, and the leak wasn’t particularly bad, but I knew that it should be patched soon. With my annual property tax bill taking up all my liquid cash at the time, I decided to ask for the $10k loan on Prosper.

I probably could have gotten a personal loan at a bank, and maybe even a home equity line… although they’re extinct now, I’m pretty sure those existed about a year ago. I probably could have asked my parents to lend me the money, but they’ve already suffered enough. :o)

Instead, I posted a loan request on Prosper. In the process, I invited my closest friends and family to help me out. I only invited those I knew would be willing to bid, and let the Prosper community do the rest.

My listing was bid down from a strategically high starting rate of 15% to the embarrassingly low final rate of 5.54%. Five of my friends bid on my listing, and even at that ridiculously low rate, four of them stayed in the money. One was outbid at 5.95%, and wisely stayed out of the fray. Anyone will agree that there are better returns to be had from other borrowers on Prosper.

While my listing was up, I got 21 questions from lenders, ranging from serious to funny, and from sincere to rude. I answered 20 of the 21 questions. My favorite was from tekiegreg, who asked: “You seem to have a disgusting habit of paying everything on time, not declaring bankruptcy and living within your means (aka low DTI) explain all your sins here immediately!” I answered: “Sorry - I will try harder next time!”

If I can give some advice to lenders asking questions, based on my personal experience as a borrower, I would encourage them to strive for two goals. First, be gentle. Asking for a loan from the public can be daunting, and an accusatory or ill-phrased question could cause a perfectly honest and well-meaning borrower to withdraw their listing and go elsewhere. Second, try to ask specific questions about the borrower’s loan intent and financial situation. One question I got was: “Do you promise to make your payment on-time and in full?” I’m not even sure what kind of question that is. It’s like asking me if I love my mother.

There is one thing in my answers to lenders that turned out not to be true… I wrote: “I expect to hold this loan for at least a year,” and yet here I am 10 days short of a year paying the loan in full. Prosper has no pre-payment penalty, which makes it easy for those of us with debitophobia to pay our loans quickly (and with no penalty) and move on.

I apologize to my lenders for paying back so early. But again, I maintain that there are better rates to be earned with other Prosper borrowers.  And next time I need some cash, you may be able to cash in on me again. Happy lending!