The down side would be not getting paid. I've looked at those sites and I see that very little lending goes out to those without good credit ratings. Well, actually, there seem to be a few that are very good looking people with stories to tell and business ventures that they can portray as needing a little capital infusion to get started.. in this economy I'm not a lender, forget that..
Prosper is a joke lendingstats.com gives statistics on prosper lender accounts and prosper loans http://www.lendingstats.com/lenders...er&sort=estimatedROIColored&sortDirection=ASC look at this person's account, he/she has put in 400K$, and within 2.5 years 260K$ worth of the loans he/she has bid on have defaulted http://www.lendingstats.com/lenders/MuleShoes prosper is not selling loans more than 4 months old, because they can't even sell it for 1 cent on the dollar
i have friend,who lend some money using prosper. it's really hard to spread large sum of money.. plus default rates pretty high..and probably will be higher the bottom line-no easy money.
I don't know how it is going to be with the "new" prosper. But in the past, default rates were really really bad. They were much worse than would be predicted by the person's credit score for all credit scores.