50Plus.com - Bid online to invest: "Bid online to invest
Article By: Jennifer Gruden
Ed has a situation many of us may have experienced in our youth. He's working his way through school in an in-demand field, and expects to be employed after graduation. In the meantime his mother offered him an interest-free loan to pay educational expenses. But Ed's found theres still a cost:
“Well, I have concluded that THERE IS a price to pay! This loan, although at zero interest, is NOT FREE. It's actually an enormous burden,” he says in his request for a loan at Prosper.com.
That’s why he’s requesting an $8,000 (US) loan at 9.00 per cent interest. And 2 days and 23 hours before his loan request will close, he’s found it fully funded, with 182 people bidding online in order to each loan him part of the total loan.
Bidding online? Isn’t that what you do to pick up bargains at eBay? Well yes. And since February 2006, it’s also been a way for people to lend money – from tens of dollars to thousands of dollars – to other people.
'Until now, financial institutions have controlled who is able to obtain credit and the rates people pay,' said Chris Larsen, Chief Executive Officer and co-founder of Prosper, in a press release issued as the company came online. 'Over time, this one-sided control has bred inefficiencies and excessive margins – leading to higher rates for borrowers, and restricting people who have money to lend from entering and generating income from this vital and lucrative market.'
'Prosper gives people the opportunity to take back the marketplace for consumer credit,' said Larsen.
How does it work?
A basic transaction is fairly simple. People who want to borrow money create a l"