Peer Lending
Peer lending, also known as person to person loans are social networks that bring together investors and borrowers. The investors can receive a high return, while the borrower may get a loan at a significantly cheaper rate than from a bank.
The Lending Club, the leader in the field of people lending to people, has a personal loan base rate of 7.84% (as of October, 2009, rates may change). And investors have averaged highly respectable returns of over 9.5% since June, 2007.
Lending Club if you want a loan, click here.
Lending Club for investors, click here .
Lending Club helps facilitate matching between borrowers and lenders. Typically, loans are up to $25,000. While one peer could lend the full amount of the loan, usually there may be many persons involved in the loan, each giving a small amount of the loan.
Advantages of Person to Person Lending
People lending to people can lower costs to the borrower while providing a high rate of return to the investor.
The advantages of peer to peer lending for the borrower :
- Loans usually do not have pre-payment penalties
- Rates are several percentage points below bank rates.
- Useful for short term loans such as an auto loan, small business loan, moving, weddings costs, credit card repayments, more.
- Is an excellent alternative to bank loans.
The advantages peer to peer lending for the investor :
- Average returns of 9.5% (Disclaimer: Your returns can vary and may not be average. As with any investment, you can lose your investment.)
- You can choose who you are peer lending to. Most investors spread thier lending to tens or even hundreds of borrowers.
- You can see the credit worthiness of the borrower before you make your lending decisions
Lending Club if you want a loan, click here.
Lending Club for investors, click here.
Find more ways to save: Use our credit card comparisons guide to find more ways to save.
Peer to peer lending. Lending Club is a network of people lending to people. Person to person loans are the wave of the future.
