Knowing your peers
Peer-to-peer lending is an Internet phenomenon that’s been around since 2001, when Circle Lending started facilitating loans between people who knew each other. Now there are several websites that get borrowers and lenders together, allowing people to obtain more affordable loan rates from investors looking to get decent returns in a very bullish market.
Here are few tips on navigating your way around them.
Websites
There are many, but the most recognized are:
VirginMoneyUS.com (formerly known as ) where borrower and lender know each other, and the website, for a small fee, handles the details of the loan. Be sure to read the “tips and tools” section.
Prosper.com is the eBay of P2P lending, where borrowers declare their needs and lenders bid down the interest rate. Currently in “quiet” mode awaiting SEC approval, the site isn’t accepting new lenders, but borrowers are able to register. Fees range to 3 percent of the note.
LendingClub.com sets specific interest rates based on factors such as job history and FICO score, but borrowers tell their stories. Notes are capped at 3 years.
Duck9.com is for college students intent on beating the financial mess, but there’s a wait list to get in. Online registration allows a newsletter and sponsorship is needed. They do car loans, renter’s insurance, even brokerage accounts.
Kiva.com is for entrepreneurs in foreign lands, many of them in developing countries.
US.Zopa.com bands credit-union members together to provide loans to other members. There is also Zopa for UK, Japan and Italy.
GreenNote.com caters to students for school loans at a fixed 6.8 percent; lenders get 5.8 percent of it.
