Prosper.com is a peer to peer lending site where anyone can be a lender or a borrower. Prosper has had mixed reviews online with some being very satisfied and others feeling that prosper is little more than a scam. I was a little hesitant to try it at first but after my fourth month as a lender I'm tentatively hopeful that I've come up with a lending strategy that will allow me to get good returns with minimal risk.

First prosper does several things to make the lender safer. They provide credit information fo those seeking loans and classify each borrower into groups representing their risk to a lender. They also have groups that borrowers can join for referrals. The site itself will warn the lender if the lender attempts to bid too low of an interest rate for a given loan. All prosper loans are 3 year loans limited to $25,000

The premise for lending on prosper is to lend small amounts to lots of borrowers. This is actually slightly difficult for people that want to start lending with small sums as the smallest amount one can lend is $50. I currently have a total of six loans. Three A class loans ranging from 10.99% to 12.90% interest. One B class loan at 16.69%. Also two C class loans at 16% and 17%. I've only been using the site for around 3 months but all of the borrowers I've lent to have paid on time or early for every payment.

I use the following criteria for lending on prosper:

• Try to bid on loans for small amounts. People with good credit are unlikely to ruin it over a few thousand dollars.
  
• I try to only lend to those who stand to gain from borrowing the money. Mostly people who consolidate higher interest credit cards or other debt.
  
• I ask the borrower questions.
  
• I don't look at loans lower than C credit no matter how tempting the interest rate, maybe this will change when I can diversify with large numbers of loans.
• I don't loan to people who have shown poor judgement with credit or are trying to borrow for useless things.
  

So far I've not had any trouble with any of the loans I've made. Feel free to comment if your experience is different or if you have another set of winning criteria.

I highly recommend researching Prosper.com if you have some spare money that you are willing to invest in something new. Prosper is not without it's risks I would also recommend looking around the web for other people's experiences as some have had very bad experiences with lending on prosper.

As with anything else buyer beware; do your research before investing and don't take this as an endorsement for doing so.