[Peter]

Prosper announced this week that they will be increasing rate for borrowers on AA, A and B rated loans. I spoke with Joe Toms, Chief Investment Officer, and he said that they are getting oversized demand from these kinds of borrowers. B-rate borrowers now have an expected return north of 10%. Will this change your investment strategy at all?

[DiligentiaLLC]

What was especially surprising to me about the announcement was how it reflected a possible shift in lending choices. Folks with A & B credit scores would traditionally be able to borrow from a bank and/or liquid accounts that offer them competitive interest rates (such as credit cards or lines-of-credit).  To see people with higher credit profiles choose p2p lending when in fact this demographic has more options is pretty exciting. 

[TravelingPennies]

Chris, It is interesting that someone would choose p2p lending who has a decent credit score, particularly when that rate might be 12-14%. I don't think they are doing it out of any loyalty to Prosper or Lending Club, I think the borrowing process is quick and easy but the bottom line is most likely that this is the best rate they can find.

[TravelingPennies]

from: Peter on April 27, 2012, 07:18:43 PM

[TravelingPennies]

Chris, I think brand loyalty could have an impact, most definitely, on second or third loans on Prosper and Lending club. Once you have been through the process once as you say it just easier to go back and repeat the process.

I think if you compare p2p lending to a bank loan then I completely agree that convenience is a big factor. But if you compare it to a credit card application or some other online lender such as Lending Tree or eloan then I think the convenience factor is about the same.

The numbers keep growing, though, so borrowers keep finding it appealing - we can't argue with that.