A while ago, I posted on Zopa, a British lending system that takes an online Dutch auction model and applies it to credit, sort of an eBay for loans. Now the model has come to the US, with a bit of the microcredit flair.
People who need money request it, and other people bid for the privilege of lending it to them. Prosper makes sure everything is safe, fair and easy…
Responsible people tend to stick together. At Prosper, a group can be official, like a school’s PTA, or informal, like the neighborhood dog-walking club. In either case, one person is the designated group leader who confirms that everyone in the group is real.
When you join a responsible group with a good payment history, you get a good reputation by association, and lenders are more likely to offer good interest rates. But, belonging to a good group puts some pressure on you, too. If you stop making your loan payments, you’ll not only tarnish your own reputation, but the group’s as well.