The premise is simple. Borrowers register on a Web site and post how much money they need, the purpose of the loan and the interest rate they're willing to pay. There's usually no charge for posting and several sites run free credit checks, which are used to assign borrowers a credit grade.

Sites such as Prosper.com are an option for borrowers looking for low interest rates, as well as for investors who want to maximize returns on their cash. Here are some details to keep in mind:

* The price: Interest rates vary from 6 percent to 19 percent or more. Borrowers generally pay a one-time fee of 1 percent to 4 percent of matched loans. Lenders pay a service fee, usually 1 percent of the outstanding principal. Such loans can help borrowers build a credit history. Lenders can deduct the unpaid principal as a capital gains loss.

* Your odds: Only 5 percent of people with credit grades that fall in the bottom three brackets (out of seven) get loans, with about 40 percent of loans going to people with scores in the two highest brackets.

* The risks: To minimize risk, lenders are urged to make many small loans rather than a few large ones. Among the most popular sites www.prosper.com, www.lendingclub.com, www.loanio.com, www.virginmoneyus.com and www.greennote.com.

Source: The Associated Press