On the customer side, this website offers high APY personal loans (my credit card is literally a better deal). On the investor side, the advertised rate of return is 5.7% between 2019 and 2022.
1. An effective return of 5.7% on unsecured loans with 15%-20% APY is... not a good deal. This signals either exceptionally high origination fees or extraordinary risk. Except it looks like you are investing in individual loans? So you don't even get this amortized 5.7%, but actually something that looks closer to "either 15% return or you lose your principal".
2. The rate of return is lower than every other broad asset class over that time period except for investment grade bonds, which weren't that far behind in 2019 and were probably a better deal given the enormous difference in risk profiles. Certainly high yield corporate debt was a way better deal on a risk-adjusted basis than given randos high-yield unsecured personal loans.
3. Most importantly, to my original point, you can get much higher quality exposure to high yield consumer debt via any brokerage account.
This is sort of exactly what I mean. Most of the "opportunities" widely available to accredited investors are really shit deals.
> Prosper.com and similar lending platforms do not require a lot of capital but users are required to be accredited investors.
Last I checked to be an accredited investor, in the EU at least, you had to have 1 million EUR available for investments. So an organism (like a bank), where you have that amount, will certify that you have it and then you can get labelled "accredited investor".
As a sidenote I don't see it as proving you're savvy or anything: it's more like a club where they don't want "plebs" to pollute their members.
Also, if prosper.com is the "club", then it's a pretty shit club. VISA provides exposure to the high yield consumer credit market and had returns that were modestly higher than prosper over the same time frame. By which I mean ~100% appreciation over 3 years vs. 5.7% per annum. And the risk profile of the equity play might even be lower; we don't know, since the distribution of defaults is not published by prosper.
