experiment 3: prosper

i opened up a prosper account in an effort to see if i can make some money online lending money out. prosper is a person-to-person lending site that allows you to either borrow or lend money. they handle the payments and credit checks and pretty much everything. you basically pick your level of risk and set your interest rate. the concept is that if there is a more personal relationship between the lender and the borrower that would result in lower defaults. i don't know if i believe that or not, but it does look like there is some room to make a decent enough return.

i'm going to lend a small bit of side money now, but what interests me with this setup is that i could actually borrow money on prosper (or somewhere else) at a fairly low rate and lend it out at a higher rate -- an arbitrage play. this leverage would enable you to lend out much more than the money you have on hand. of course, you'd have to have a good credit score for this to work *and* you'd have to be pretty savvy in determining risk / rates / and really become an expert in the loan business.