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    1 Reply Latest reply on Oct 31, 2009 6:15 AM by LUCKIEST

    Please tell me about Peer to Peer Lending!

    ChanceEdwards Newbie
      I just want to learn as much as i can about Peer to Peer lending (social lending). How does it work? What companyies do p2p lending? and what company is best (+why).
        • Re: Please tell me about Peer to Peer Lending!
          LUCKIEST Guide

          Peer to Peer


          In 2005, there were $118 million of outstanding peer-to-peer loans. In
          2006, there were $269 million, and, in 2007, a total of $647 million.
          The projected amount for 2010 is $5.8 billion


          The marketplace model of Person to Person Lending on the Internet
          enables individual lenders to locate individual borrowers and
          vice-versa. This model connects borrowers with lenders through an
          auction-like process in which the lender willing to provide the lowest
          interest rate "wins" the borrower's loan. The marketplace process may
          include other intermediaries who package and resell the loans, but the
          loans are ultimately sold to individuals or pools of individuals.


          The "family and friend" model forgoes the auction-like process
          entirely and concentrates on borrowers and lenders who already know one
          another, as with two (or more) friends or business colleagues
          formalizing a personal loan. Whereas the primary benefit of the
          marketplace model is the "match making" aspect, the family and friend
          model emphasizes online collaboration, loan formalization and servicing.


          Traditionally, lending institutions have benefited from scale and diversification. By pooling the available money supply
          and lending it out again, the impact of any one default is made trivial
          in light of the timely payment of the vast majority of the notes
          outstanding. The downside to the traditional model is that it has
          introduced greater transaction overhead and removed community loyalty
          from the equation.


          Person to Person Lending allows individual participants to directly
          control the allocation of their own capital, as opposed to the
          traditional bank lending models which pool all funds together and
          completely remove the individuals who actually own the money from the
          decision-making process regarding who may borrow that money, for how
          long they may borrow it, and under what rates and terms.

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