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Thread: Peer To Peer Lending

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    Will.Spencer's Avatar
    Will.Spencer is offline Retired
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    Peer To Peer Lending

    Has anyone here been playing with Peer to Peer Lending?

    There are almost a dozen players in this space, including:

    US



    UK



    India



    This seems like an idea that could really take off if done right. Of course, I'm not sure that anyone yet knows what approaches are going to turn out to be "right" or "wrong" yet.

    What do you think?
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    m42 (10 August, 2009)

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    I am not sure if these services are any good, but I'm curious about some things. What makes them better than banks? Are these services careful about who they lend to? Do they lend to people who don't pass financial background checks like some of the failing banks did?

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    One thing I find rather strange. For example I got a random listing from Prosper. Someone is wanting a $1000 loan, tho he claims to have a monthly income of $7500

    To me this looks questionable.

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    Boober.nl from The Netherlands was founded in 2007 and went bankrupt earlier this year leaving 1200 people without their money (about € 1.65M to claim). The founders claimed this occurred due to the current economical crisis.
    One of the problems they were facing was that the longer Boober existed, the more bad payers came into play.

    Perhaps with better protection and screening the concept seems viable for longer term.

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    m42
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    I do it with LendingClub. They tout average returns of about 10%.

    We'll see how it turns out.
    (

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    Quote Originally Posted by vectro View Post
    I am not sure if these services are any good, but I'm curious about some things. What makes them better than banks? Are these services careful about who they lend to? Do they lend to people who don't pass financial background checks like some of the failing banks did?
    I'm thinking because it's faster, requires less paperwork and the %'s are usually lower. But the risk is likely higher.

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    I took a quick look at the LendingClub. The rate of return is interesting. Do the borrowers provide any kind of collateral?

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    Quote Originally Posted by bogart View Post
    I took a quick look at the LendingClub. The rate of return is interesting. Do the borrowers provide any kind of collateral?
    Nope. The loans are unsecured.

    There is a risk gradient. The higher the risk, the higher the lending rate. As a lender, you get to select how much risk you'd like to incur. LC also permits you to trade debt with other lenders.
    (

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    Quote Originally Posted by m42 View Post
    There is a risk gradient.
    That's correct. I noticed the risk gradient. Some of the rates go up to 20%+ similiar to credit cards. I guess as long as you can manage the risk, there's some money to be made. Looks like fun too.

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    sachin410 is offline Newbie Net Builder
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    Quote Originally Posted by m42 View Post
    I do it with LendingClub. They tout average returns of about 10%.

    We'll see how it turns out.
    a 10% return may not be attractive for some.

    e.g. In India, banks offers 8%+ on fixed deposits and many companies offer 10%-12% annual returns on fixed deposits.
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