Anyone have thoughts/experiences in P2P lending? This is a fairly successful example in the US: http://www.prosper.com And here is an Australian alternative: http://www.societyone.com.au/about
My brother-in-law borrows all my tools and I sometimes lend them out to his friends. Our local woodwork shed for some reason insists that you bring your own hand tools, I suppose it is to make sure you don't abuse them but the one reason I wanted to join was so I didn't buy a load of cheap tools to clutter up my shed.
So, no love for this type of thing? On the surface it looks like a fairly ethical way to lend money given it's 1:1. Unless I am missing something obvious...
Haven't had a chance to look at it yet rod, I remember reading something very similar a couple of years ago that Ladybird posted. So don't give up hope of any feedback.
This takes some risk out of it (but I haven't read the full article): http://au.news.yahoo.com/latest/a/-...lender-to-refund-savers-if-borrowers-default/
Launching to the masses mid this year. I think at the moment they are trying to build credibility before the tricky part - dealing with us broke ass investors.:lol:
In the UK there are 2 main peer to peer lending platforms. Zopa, which is designed mainly for customers to take out a personal loan and Funding Circle, which is for businesses to take out loans. I invested a small but in Funding Circle, as the rates used to be great. At one point they were offering a 1% bonus for any investment made. So I was lending out small lots to businesses and then as soon as the loan was accepted I was selling the Loan Part on in the secondary market on their platform, and then re-lending the money to another business, there was a transaction charge for this, but I was still making a good little bonus. Also the returns on Funding Circle used to be great, around 10%, this was because there was a lot of demand for loans from business but not enough supply of money from lenders. Now the rates are not that great, also the UK government now invests to businesses through funding circle. They have allocated 20million. They match the average rate the investors lend to each businesses at, and give 20% of the total asked for. For example a business is asking for 100k, the auction ends with different investors offering between 4% and 8% and average rate is 6%, The Government will loan 20k to this business at 6%. This has increased the supply of money within this platform, and the rates have reduced. You can still make a good 6% or 8% return before costs and bad debt. But after the estimated bad debt the return will not be so high. So in conclusion, peer to peer lending is a good investment when compared to interest rates in a bank saving account. But not as good as it used to be.
Hey Chrisliver, I use Zopa. Basically Santander emailed me with the great news that they were going to reduce my interest rate from 3% to 0.1% which made the decision easy. I am currently getting 5% net, which is pretty good for the UK as you would know. They now have what they call their "Safeguard" offer where you just give them money and they lend a small amount among lots of borrowers. Any losses are covered (in theory) by Zopa. Seems OK to me at the moment, but I guess there are always risks to consider.
Yea, the interest rates in the UK are terrible at the moment for savers. I just make a new thread about investing in property through crowd sourcing platforms, Here is the link: http://forums.silverstackers.com/message-534182.html#p534182 The safegaurd thing seems interesting, obviously you are not as protected as if you have savings with a bank as that is protected by FSCS guaranteeing you 100% of your money up to 85k if the bank goes bust. I think though that the "safegaurd" thing actually is for any investment made through Zopa? Seems to be just a fund that Zopa can access to pay back investors if the borrower forgoes on their payment. But maybe this is only available for investors who choose this option? And a premium is added? I have never invested through Zopa, just Funding Circle.
As far as I know, all lenders are now on their Safeguard scheme. Certainly I have never been able to invest any other way. I don't think new investors get any other option. Zopa make 1% on any loans made, so my net 5% is effectively 6% + any fees charged to the borrower. One thing you need to be aware of is that it takes quite some time to lend money, it effectively drips out to borrowers and the amount lent per borrower depends on how much you deposit. For example, if you deposit 1000 you end up lending 10 per borrower. If you deposit 10,000 you lend 50 per borrower, etc up to a max 2,550 per loan if you deposit 510k.
