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"I have enough money to last me the
rest of my life, unless I buy something." From the Ground Up Steve Lubs
was looking to get rid of his $8,000 in credit card debt, but his high
interest rate had him bogged down. He tried getting a loan through a bank to
pay off the balance but couldn't find one with an interest rate lower than 12
percent. That's when
he turned to Prosper, one of several peer-to-peer lending networks that
connect people who need a cash infusion with those who have money to lend.
About 70 people have pitched in with $100 to $300, totaling the sum he needs
to get out of debt, at a rate of 8 percent. "When
it comes to borrowing, it's a bargain," said Lubs, an engineer who lives
near Rather than
turning to the traditional sources of loans -- banks, mortgage lenders,
credit unions -- many cash-strapped consumers are borrowing from friends,
family members and even strangers and are getting favorable terms and rates. And
people with money to spare see lending it to others as a better investment
than socking it away in a low-yield savings account or playing the volatile
stock market. "Worthy
borrowers used to have lots of options, but those have dried up," said
Chris Larsen, chief executive of Prosper, where about 780,000 users have
exchanged $160 million since the lending network launched 2 1/2 years ago. ► Business
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