P2P Lending: Prosper.com vs. Lending Club – an experiment

I have been intrigued by peer-2-peer lending for a while .
So, last night I signed up with both prosper.com and lendingclub.com and I will post my experience and impressions from time to time.

My goal for this experiment is to further understand p2p lending, evaluate if it could be a viable investment for a larger amount and achieve a net return of  LIBOR + 6% – so currently about 6.5% .  I don’t really believe the %-returns both sites advertise: 7% to 14% – we’ll see.

Read my first impressions and status so far >>

First impression of Prosper.com:

• Looks and feels very professional
• Signup process requires SS#, driver licence number and a credit check (why?)
• $50 bonus to “play with” while a bank transfer is completed
• Up to 2% bonus for lenders on investments (appears somewhat desperate)

Status so far:

1. Funded prosper account with $500
2. Invested $50 signup-bonus in two individuals, got outbid and re-listed.
3. Trying to get my head around the bidding process and the borrower profiles
4. Asked a borrower two questions – no answer so far
5. Created two “portfolios” with $100 each, to be invested in AA and A borrowers

First impression of Lendingclub.com”

• The name implied a less professional company to me – don’t know why
• I signed up to lendingclub after reading multiple blog posts about it outperforming prosper
• Signup was less involved (no #ss number or driver licence, no credit check)

Status so far:

1. Funded with $50 via paypal (that was nice and easy)
2. Waiting for bank account to be verified to transfer money
3. Funded two individuals with $25 each

Blog posts that helped me decide to invest in p2p:
1, 2, 3, 4, 5

Comments are welcome!