Borrowing Without Bankers

The stock market offers a good potential return…but lots of risk. The bank? Not much risk…but not much return either. Sound familiar? Then listen to this:

“My average is 20%. I have 102 loans out right now, and my average is 20%.”
-Ava Pierre, Internet Lender

Ava Pierre is a new kind of investor in a new kind of investment. She’s not investing in stocks… she’s investing in people.

“People are coming to Prosper with a definite need. You’re fulfilling the need and you can do it with a small amount of money. So I thought it was really cool.”
-Ava Pierre, Internet Lender

She’s talking about Prosper.com. A place where lenders and borrowers meet online with no bank needed. If you need money, you tell your story. If you have money, you offer to lend it. Deals are stuck when they agree on a rate. In short, this is the eBay of lending.

Good for borrowers who don’t want the hassle of banks. But also good for lenders looking for an investment that pays more than a bank and is more personal than the stock market.

“We’re changing the way people are. The way they think. People are getting them out of that old mentality that I’m always going to be broke and they realize they don’t always have to be broke. ”
-Ava Pierre, Internet Lender

What about risk? The best way to reduce risk is to lend little amounts to lots of borrowers. Minimum loan is a hundred bucks and maximum length is three years.

This may be borrowing without bankers, but it isn’t borrowing without middlemen: these websites charge a percentage to both borrowers and lenders. But still, a borrowing and investing alternative of “interest”.

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