This is the final part of a 3-part post on Prosper.com. The beginning of this review can be found here.

The Bottom Line

For many people, Prosper.com is above their risk tolerance. As far as I’m concerned though, I am a firm believer that education, due diligence and discipline are great mitigators of risk. On the discipline front, I have created a set of lending rules I use when evaluating loans on Prosper. Any loan that does not meet all of the rules’ criteria is immediately out of the running. No exceptions. In future posts on Prosper, I’ll be sharing my lending rules along with periodic updates on the performance of my portfolio and additional lessons learned along the way. Stay tuned to the “Related Posts” section at the end of this post for more info on Prosper.

Getting Started

I recommend you start out on “paper” with your loans. You can sign up for a free account as a lender without any prerequisites or commitments. Once you have an account, research loans and write down those that you would have done if you were using real money. Track these loans over time to get a feel for how well you’re learning the ropes.

You can also learn from other Prosper members by “spying” on the loans they select. One of my absolute favorite sites is Eric’s Credit Community. I especially love watching the lenders on this page.

When you feel sufficiently confident to use real money, make sure you have at least $1,000 you’re able to use with Prosper. At a minimum bid of $50 per loan, you need the $1,000 to sufficiently diversify yourself across 20 loans.

Prosper is running a refer-a-friend offer right now through June 30, 2008 where they’ll credit your account (and mine) with $25 upon completing your first loan with them. If you’re going to be setting up an account, be sure you click through this link beforehand so that you maintain your eligibility for the $25 credit.

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