This is the second in my weekly series of new p2p lending analysis sites and today we turn our attention to Prosper. Since Lendstats went down in July Prosper investors have been left in the dark with nowhere to go for data analysis. Until now.
Prosper Stats launched last month and after playing around with it for the last couple of weeks I think it is even more useful than the old Lendstats site. Rocco Galgano is the creator of the site and he decided to build it after he went looking for a Lendstats alternative for Prosper investors and could not find anything. He initially did it just for his own use but soon realized he had created something others would value.
Methodology for Calculating ROI
When you go to the main page at Prosper stats you see some search options and a count of all the loans along with many fields including the all important estimated return. The overall estimated return (for all Prosper 2.0 loans) is seems to be slightly higher than Lendstats ROI numbers so I asked Rocco to explicitly detail how he calculates this number. Here is his response:
What I did was calculate the average percentage of loan value that is lost during a default (this was about 85%). Then I calculated how often a loan goes to charge off after going late (calculated this separately for each late value). I multiplied the two together to come up with a loss estimate. Then I lowered it a little to compensate for charge offs that eventually get paid, then finally I went ahead and rounded stuff to even numbers to make it easier to work with (this is of course just an estimate).
The numbers I am currently using in my calculation for chances of defaulting based on late status are:
1 Month late: 85%
2 Month late: 90%
3+ Month late: 95%
I multiply that by 85% for the average amount of principal lost then I multiple that by the principal remaining to get my dollar amount loss estimate.
So if you had a loan that had $10.00 in principal and it was Late, I would estimate a loss of $5.10 ($10.00 * .6 * .85). The same loan at 3 Months late would be an estimated loss of $8.08 ($10.00 * .95 *.85). Anything that has defaulted gets completely written off.
Maybe some of the mathematicians here can comment on these calculations but the end results seems to be within a percentage point of where Lendstats was. Regardless, it does provide a way for investors to compare filtering strategies – something we have been unable to do for several months now.
A Comprehensive Set of Tools for Prosper.com Investors
There is a lot to like about Prosper Stats. Many of the favorite parts of Lendstats have been included plus several unique and useful new features. Rather than list them all out here I decided to do a quick video so people can get a more hands-on idea about how this site work. There are three main components of Prosper Stats (Loan Analysis, Previously Late Loans and Top Lenders) and each section is covered in the video below. If you can’t see the video below here is the URL on Youtube.
So what you do you think Prosper investors? Please let me know in the comments below.