Do you ever look at a website and say, “Why didn’t I think of that?” or “I wish I knew that existed before…”. Enter the site Prosper.com.

This site is essentially a money lending network with borrowers looking for loans, except instead of borrowing from a bank, anybody can lend money to those seeking the loans. This is how it works:

1.) A borrower creates a listing of how much money they need, why they need it, includes their credit information and set an interest rate at how much they are willing to pay for their loan.

2.) Anybody can be a lender. Lenders look at the listings and make bids as low as $50 and set their own interest rate based on the information provided from the borrowers.

3.) Prosper combines all of the bids with the lowest interest rates into one easy loan.

4.) The borrowers make payments to Prosper who in turn deposits the payments into the Lenders bank accounts.

Obviously people who are looking to borrow money would be interested in Prosper because they would be able to get a lower interest rate from a bank, especially those with poor interest rates. There are a lot of people just looking to borrow money merely to improve their credit ratings.

Lenders like Prosper because of the huge returns they can earn with their money. Of course there is some risk for the borrowers, but you can look at the borrower’s circumstances, credit rating and income statistics and make very smart financial decisions on who to lend to.

Here is an example of someone that I would look to lend money to. There is a gentleman who needs a home improvement loan. He has a near perfect AA credit rating, a ridiculously low rate debt-to-income rate of 5% and is willing to pay out 14% on the money borrowed. That is one safe investment with an extremely high return.

Smart People Alert!

Here is where I believe members of the site are extremely money savvy. There are people with high credit ratings looking to borrow money at about an 8% rate. In turn, those people use that money to become lenders to other prosper borrowers to earn higher returns on their money. Essentially they are taking the money that they borrow at an 8% rate and lend it to others at a rate of 20%. They are doing essentially nothing and making money doing it. Sounds like a good job to me!