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View Full Version : Peer to peer lending?


Tybee
10-15-17, 10:30am
Have any of you guys tried Prosper or Lending club for peer to peer lending? I wonder as an investment, what rate of return is reasonable to expect? I know it is taxed as ordinary income and not capital gains, but curious if anyone has tried lending through these and what kind of return are you getting over time?
SteveinMN
10-15-17, 11:43am
I haven't done Prosper or Lending Club but I did do Kiva for a while. I think a reasonable rate of return to expect is zero. I'll grant that I don't know the complete mechanisms of any of the peer-to-peer lending organizations you mentioned. But for the 50 loans I made on Kiva, 6 defaulted. I didn't do it to make money. But I'd be watchful of the likelihood of payoff versus interest collected. Or maybe I'm completely ignorant of the way these organizations work now.
LDAHL
10-15-17, 12:21pm
From what I've read, P2P returns vary widely, with many people claiming to be getting 5-15%. I would suspect, however, that if we were to see a significant or even a minor downturn, these unsecured loans to strangers would become problematic.
Tybee
10-15-17, 12:23pm
Thanks, Steve and LDAHL, for your thoughts.
iris lilies
10-18-17, 12:17pm
Here is a recent post from the MMM site:



I was a lender on Prosper as well, back in 2007. I put in $7k on three-year loans. I only got $5k of that back. My last payment (debt recovery) was in 2015... Other than the lost money, my biggest regret was complicating my taxes for nine years.
Tybee
10-18-17, 3:30pm
Here is a recent post from the MMM site:



I was a lender on Prosper as well, back in 2007. I put in $7k on three-year loans. I only got $5k of that back. My last payment (debt recovery) was in 2015... Other than the lost money, my biggest regret was complicating my taxes for nine years.

Wow, that is horrible. I think I am officially off this idea!
iris lilies
10-18-17, 5:15pm
Wow, that is horrible. I think I am officially off this idea!
I know, I would not have considered the tax consequences. Having to deal with that in exchange for a feel-good act is a small circle of hell for me, granted, an outer circle but still a PITA. :)