In anticipation of our prosper account getting set up, we’ve been doing some preliminary cruising to inform the decision about who to lend to.
Some thoughts have occurred to us, so we’re sharing them with you.
It seem a bit unethical to charge people who are in distress high interest rates. What we mean is, a lot of borrowers on prosper are deep into credit card debt, have expensive medical bills to pay, or seem to have bad money management skills. Basically, many of these are people desperate. By charging interest rates north of say, twenty percent, it seems like one is just prolonging these borrowers misery.
But, on the other hand, some borrowers are paying interest rates on payday loans that are as high as 70 percent or credit card rates around 30. So, it would seem that anything less than that would be beneficial to the borrower.
The issue lies in whether or not prosper.com ultimately provides the tools for its clients to escape their indebetedness and learn the financial management tools to help them prosper. For those who are not already in a deep debt crisis, it could possibly allow someone to get in even deeper. These are just some of our thoughts to keep in mind if you decide to lend through prosper.
It’s a bit of a conundrum.
-James&Miel
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