Book Review: The Complete Idiot’s Guide to Person-to-Person Lending

The moment I saw The Complete Idiot's Guide to Person-to-Person Lending, one question immediately came to mind: Where has it been all this time? Person-to-person lending started in the U S with Prosper.com (now Prosper Marketplace) in early 2006. I first heard about Prosper from a Credit.com article. In April 2007 I was officially a lender. But still, without a Complete Idiot’s Guide, this complete idiot went on a lending spree and… well, let’s just say that I’ll try not to ask for a Federal bailout.

Thankfully, you’ll find that the Guide is thorough and leaves no room for error. If you have a strong working knowledge of credit scores and how they are calculated, as well as our current economy and how the current economic climate might all affect a person’s chances of getting a loan, you’ll breeze through “Part 1: The Basics of Person-to-Person Lending.” You might then discover that the Guide really starts with “Part 2: Prime-Time Players in the P2P Marketplace,” which identifies and distinguishes several person-to-person lending sites. I admit I’ve grown attached to Prosper because nearly all my experience lies there. However, I was amazed to find that there are many others including Kiva, VirginMoney, and GreenNote.

Part 3 and Part 4 explore borrowing and lending money, respectively. You’ll find nearly all of this information on the website of the company you get started with. However, if you decide to sit on the sidelines for now—there isn’t much choice with some companies—these sections are definitely worth your time and can save you serious money in the long run. Sharpen your marketing skills to create the perfect listing. This will then get you the best interest rate on your loan. Or diversify your investment into many loans to minimize risk while still maximizing return. You’ll find out how to do it here.

Personally, as a lender, the highlight of this book was the section on taxes, outlined in Part 4. This was unexpected and very refreshing. It was basic but thorough. It works through 1099s and how to handle defaulted loans. The book covers federal and even state income taxes. Also, the Guide is not shy about telling you when a tax professional is needed. I’ve never seen this on a third-party website or blog and I doubt I ever will. The Guide really did its homework. That piece of advice alone is worth the price of this book.

Let’s get back to the first question: Where was this book all this time? Taxes aside, it was everywhere! It was in blogs, on websites (including Credit.com), and in the news. Lucky for us, it’s now in a Complete Idiot’s Guide to help us all navigate this exciting market of person-to-person lending now and as it really takes off in the next few years.

Alex Won is our credit card editor and a peer-to-peer lending network expert. He helps match Credit.com customers with their perfect credit cards everyday. See Alex's top credit card picks online.