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Morgan Stanley says peer-to-peer loans will soar to $22b in Australia by 2020, peer to peer loans.#Peer #to #peer #loans


Morgan Stanley says peer-to-peer loans will soar to $22b in Australia by 2020

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Peer to peer loans Morgan Stanley predicts P2P volumes in Australia will soar to $22 billion by 2020. Photo: Karl Hilzinger

The value of loans made through peer-to-peer lending platforms in Australia will surge to $22 billion in the next five years, investment bank Morgan Stanley predicts – crimping the profits of the big banks and forcing them to speed up investment in new technology.

By 2020, P2P lending to Australian consumers will soar to $10.4 billion and comprise 6 per cent of total consumer lending in Australia, suggesting the investment in Australian market P2P leader SocietyOne by media moguls James Packer and Ryan Stokes in December was well-timed.

In addition, P2P lending to small businesses would grow to $11.4 billion over the same period, Morgan Stanley said, at rates of growth faster than consumer credit, given constraints on big bank lending to SMEs.

P2P lenders, who are increasingly being referred to as “marketplace lenders” to reflect growing institutional funding of the loans, provide technology platforms that match borrowers with investors, offering both sides more attractive interest rates than banks.

Morgan Stanley estimates that less than $25 million has been lent to consumers so far by SocietyOne and competitor RateSetter. A third P2P lender, MoneyPlace, is preparing to launch. Marketlend and UK-based Thin Cats are also in the Australian market offering P2P loans to small businesses but P2P SME lending so far has been negligible.

Morgan Stanley said in a recent “Blue paper”, which received input from its Australian bank analysts Richard Wiles and Matt Dunger: “We believe there is an opportunity for P2P lending to establish a meaningful presence in Australia due to high online/mobile banking penetration, growing margins and high returns in unsecured lending and a highly concentrated banking industry focused on mortgages and deposits rather than on consumer unsecured [lending].”

Morgan Stanley said it expected SocietyOne, which launched in August 2012, to ultimately raise money from retail investors and expand the products and types of loans available to borrowers. The investment bank said it understood SocietyOne had received loan demand over its platform of about $100 million since launch and loan balances were now below $25 million.

Customer acquisition a key challenge

Much of the growth in borrower demand at SocietyOne had been driven by interest rate comparison sites such as RateCity, and the conversion rate of lending was relatively low, Morgan Stanley said. It highlighted raising awareness and acquiring customers as key challenges, because the big banks already had lock-up deals with consumer-facing companies like Qantas, Woolworths, and Coles.

You will now receive updates from Business AM Newsletter

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Get the latest news and updates emailed straight to your inbox.

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Strategic alliances to acquire customers would become more widespread, the report said. In March, Carsales.com.au and its joint venture Stratton Finance took a combined 20 per cent stake in RateSetter Australia. OnDeck, an online lender not using a P2P model, launched in Australia last month with a 30 per cent stake and distribution agreement from recently relisted small business accounting software provider MYOB.

Morgan Stanley highlighted a series of other risks to its view that P2P would take off. One was regulatory scrutiny by the Australian Securities and Investments Commission, “which could limit the growth prospects for retail funding of marketplace models”.

It also pointed to the sustainability of the business model through a downturn, a criticism made by Commonwealth Bank of Australia chief executive Ian Narev at The Australian Financial Review‘s Banking & Wealth Summit last month. “Unlike the US and UK, there is no real-life scenario that can be used to ‘stress test’ potential credit losses,” Morgan Stanley said.

The strength of the Australian banking oligopoly might also restrict P2P growth. “We believe that the major banks have more than enough financial strength to compete aggressively with P2P lenders or to attempt to replicate their technology and pricing models, if they choose to do so,” the investment bank said. However, it added: “At this stage, we doubt that the response will be particularly quick or aggressive.”

Banking ‘largely undisrupted’, says Packer

Some astute investors also believe Australia’s banks will be slow to respond to the P2P threat. Mr Packer said when investing in SocietyOne in December that “banking is an area that has been largely un­dis­rupted” and “that doesn’t make much sense given its profitability and margins”.

Other investment banks have also highlighted the size of the disruption being faced by Australia’s big banks, after customers moving online savaged the media and tourism industries. Last year, Macquarie Group estimated almost 30 per cent of the annual revenue of the major banks – or $27 billion – could be picked off by new players including P2P lenders in the long term.

In its report, titled Global marketplace lending: Disruptive innovation in financials, Morgan Stanley said there was a strong precedent in Australia for banking disruption, because mortgage brokers had had a material impact on the structure of the mortgage market and the margins that big banks earn on their home loan portfolios.

It pointed to an expansion in the margins of big banks’ consumer unsecured lending books by more than in any other major product segment since the financial crisis and the lack of innovation in unsecured personal loans. It also said that the move towards comprehensive credit reporting would help P2P players by allowing them to better assess borrowers’ creditworthiness.

Global P2P could hit $US490b by 2020

The arrival of P2P is a global dynamic and the report highlighted surging volumes in the US, where P2P lender origination has doubled every year since 2010 to $US12 billion ($15.2 billion) last year, but still represents only 1.1 per cent of total US consumer unsecured loan originations. The bank said this could reach 10 per cent by 2020, helping the global P2P market grow to between $US150 billion and $US490 billion by 2020.

Loan originations were being “turbo-charged” by institutional funding of loans, which made the term “peer-to-peer” a misnomer, Morgan Stanley said, adding that “marketplace lending” was a better description.

The report predicted more deals between global banks and P2P lenders, especially small and mid-sized banks, which have been losing market share to large banks over the past decade and have been working with online lenders to benefit both parties. This could evolve to a “lending-as-a-service” (LaaS) model, in which certain bank functions like credit underwriting, customer prospecting, and originations could be outsourced to marketplace lenders.

Research into bank customers had revealed millennials (born after the early 1980s) favoured fast, convenient, and cheaper credit and were more brand agnostic. Therefore, as incumbents’ key customers are getting older, maintaining market share would depend on investing in speed, faster/broader decision-making, and leveraging social media to improve the customer experience, Morgan Stanley observed.

In Australia, Morgan Stanley said the profitability of the big banks’ backbook reduced the likelihood that they would respond to the P2P threat by adopting “risk-based pricing” and they were more likely to focus on digital offerings.

“It is too early to tell how banks in Australia will respond given that marketplace lending has only just taken off,” it said. “However, we note that the major banks have been focused on developing their online and digital offerings, suggesting that they want to match the service proposition and ease of application provided by the marketplace lenders, even if they are unlikely to compete on price.

“In our view, the major banks will tolerate some loss of share to P2P lenders, rather than adopt risk based pricing for personal loans and credit cards. The high returns and profitability of their in-force portfolio mean that they are more prepared to sacrifice volume than price.”


Morgan Stanley says peer-to-peer loans will soar to $22b in Australia by 2020, peer to peer loans.#Peer #to #peer #loans


Morgan Stanley says peer-to-peer loans will soar to $22b in Australia by 2020

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Peer to peer loans Morgan Stanley predicts P2P volumes in Australia will soar to $22 billion by 2020. Photo: Karl Hilzinger

The value of loans made through peer-to-peer lending platforms in Australia will surge to $22 billion in the next five years, investment bank Morgan Stanley predicts – crimping the profits of the big banks and forcing them to speed up investment in new technology.

By 2020, P2P lending to Australian consumers will soar to $10.4 billion and comprise 6 per cent of total consumer lending in Australia, suggesting the investment in Australian market P2P leader SocietyOne by media moguls James Packer and Ryan Stokes in December was well-timed.

In addition, P2P lending to small businesses would grow to $11.4 billion over the same period, Morgan Stanley said, at rates of growth faster than consumer credit, given constraints on big bank lending to SMEs.

P2P lenders, who are increasingly being referred to as “marketplace lenders” to reflect growing institutional funding of the loans, provide technology platforms that match borrowers with investors, offering both sides more attractive interest rates than banks.

Morgan Stanley estimates that less than $25 million has been lent to consumers so far by SocietyOne and competitor RateSetter. A third P2P lender, MoneyPlace, is preparing to launch. Marketlend and UK-based Thin Cats are also in the Australian market offering P2P loans to small businesses but P2P SME lending so far has been negligible.

Morgan Stanley said in a recent “Blue paper”, which received input from its Australian bank analysts Richard Wiles and Matt Dunger: “We believe there is an opportunity for P2P lending to establish a meaningful presence in Australia due to high online/mobile banking penetration, growing margins and high returns in unsecured lending and a highly concentrated banking industry focused on mortgages and deposits rather than on consumer unsecured [lending].”

Morgan Stanley said it expected SocietyOne, which launched in August 2012, to ultimately raise money from retail investors and expand the products and types of loans available to borrowers. The investment bank said it understood SocietyOne had received loan demand over its platform of about $100 million since launch and loan balances were now below $25 million.

Customer acquisition a key challenge

Much of the growth in borrower demand at SocietyOne had been driven by interest rate comparison sites such as RateCity, and the conversion rate of lending was relatively low, Morgan Stanley said. It highlighted raising awareness and acquiring customers as key challenges, because the big banks already had lock-up deals with consumer-facing companies like Qantas, Woolworths, and Coles.

You will now receive updates from Business AM Newsletter

Business AM Newsletter

Get the latest news and updates emailed straight to your inbox.

By submitting your email you are agreeing to Fairfax Media’s terms and conditions and privacy policy.

Strategic alliances to acquire customers would become more widespread, the report said. In March, Carsales.com.au and its joint venture Stratton Finance took a combined 20 per cent stake in RateSetter Australia. OnDeck, an online lender not using a P2P model, launched in Australia last month with a 30 per cent stake and distribution agreement from recently relisted small business accounting software provider MYOB.

Morgan Stanley highlighted a series of other risks to its view that P2P would take off. One was regulatory scrutiny by the Australian Securities and Investments Commission, “which could limit the growth prospects for retail funding of marketplace models”.

It also pointed to the sustainability of the business model through a downturn, a criticism made by Commonwealth Bank of Australia chief executive Ian Narev at The Australian Financial Review‘s Banking & Wealth Summit last month. “Unlike the US and UK, there is no real-life scenario that can be used to ‘stress test’ potential credit losses,” Morgan Stanley said.

The strength of the Australian banking oligopoly might also restrict P2P growth. “We believe that the major banks have more than enough financial strength to compete aggressively with P2P lenders or to attempt to replicate their technology and pricing models, if they choose to do so,” the investment bank said. However, it added: “At this stage, we doubt that the response will be particularly quick or aggressive.”

Banking ‘largely undisrupted’, says Packer

Some astute investors also believe Australia’s banks will be slow to respond to the P2P threat. Mr Packer said when investing in SocietyOne in December that “banking is an area that has been largely un­dis­rupted” and “that doesn’t make much sense given its profitability and margins”.

Other investment banks have also highlighted the size of the disruption being faced by Australia’s big banks, after customers moving online savaged the media and tourism industries. Last year, Macquarie Group estimated almost 30 per cent of the annual revenue of the major banks – or $27 billion – could be picked off by new players including P2P lenders in the long term.

In its report, titled Global marketplace lending: Disruptive innovation in financials, Morgan Stanley said there was a strong precedent in Australia for banking disruption, because mortgage brokers had had a material impact on the structure of the mortgage market and the margins that big banks earn on their home loan portfolios.

It pointed to an expansion in the margins of big banks’ consumer unsecured lending books by more than in any other major product segment since the financial crisis and the lack of innovation in unsecured personal loans. It also said that the move towards comprehensive credit reporting would help P2P players by allowing them to better assess borrowers’ creditworthiness.

Global P2P could hit $US490b by 2020

The arrival of P2P is a global dynamic and the report highlighted surging volumes in the US, where P2P lender origination has doubled every year since 2010 to $US12 billion ($15.2 billion) last year, but still represents only 1.1 per cent of total US consumer unsecured loan originations. The bank said this could reach 10 per cent by 2020, helping the global P2P market grow to between $US150 billion and $US490 billion by 2020.

Loan originations were being “turbo-charged” by institutional funding of loans, which made the term “peer-to-peer” a misnomer, Morgan Stanley said, adding that “marketplace lending” was a better description.

The report predicted more deals between global banks and P2P lenders, especially small and mid-sized banks, which have been losing market share to large banks over the past decade and have been working with online lenders to benefit both parties. This could evolve to a “lending-as-a-service” (LaaS) model, in which certain bank functions like credit underwriting, customer prospecting, and originations could be outsourced to marketplace lenders.

Research into bank customers had revealed millennials (born after the early 1980s) favoured fast, convenient, and cheaper credit and were more brand agnostic. Therefore, as incumbents’ key customers are getting older, maintaining market share would depend on investing in speed, faster/broader decision-making, and leveraging social media to improve the customer experience, Morgan Stanley observed.

In Australia, Morgan Stanley said the profitability of the big banks’ backbook reduced the likelihood that they would respond to the P2P threat by adopting “risk-based pricing” and they were more likely to focus on digital offerings.

“It is too early to tell how banks in Australia will respond given that marketplace lending has only just taken off,” it said. “However, we note that the major banks have been focused on developing their online and digital offerings, suggesting that they want to match the service proposition and ease of application provided by the marketplace lenders, even if they are unlikely to compete on price.

“In our view, the major banks will tolerate some loss of share to P2P lenders, rather than adopt risk based pricing for personal loans and credit cards. The high returns and profitability of their in-force portfolio mean that they are more prepared to sacrifice volume than price.”


Borrowing through a Peer to Peer Platform – Money Advice Service, peer to peer loans.#Peer #to #peer #loans


Borrowing through a Peer to Peer Platform

Over the last few years a new area of lending has been increasing in popularity – peer to peer, or social lending. The idea is that people who want to borrow money are matched up with those who will lend it. Here’s how it works and how it compares to borrowing from banks and building societies.

What is peer to peer lending?

This is a form of borrowing and lending between individuals, or ‘peers’, without a traditional financial institution such as a bank or building society being involved.

If you want to borrow money, the peer to peer websites match you up with people willing to lend it to you.

As such, the companies behind these services (called ‘platforms’) act as intermediaries between borrowers and lenders.

They can offer lower interest rates than traditional loans. Whether or not this is the case for you will depend on certain factors such as your credit rating.

Some of the best deals are available only if you have an excellent credit history and no previous problems.

If you apply for a loan, you’ll be credit checked using a credit reference agency and must pass the peer to peer company’s own checks.

Pros of peer to peer lending

  • If you want to borrow some money, peer to peer loans can be cheaper than banks or building societies, especially if you have a very good credit rating.
  • Some peer to peer websites have no minimum loan amount (in contrast to most banks and other mainstream lenders) which might suit you if you only want to borrow a small amount for a short period.
  • They are another option if you have difficulty getting a loan from a bank or building society, depending upon your credit rating

Cons of peer to peer lending

  • Interest rates of peer to peer loans might be higher than high street banks or building societies, depending on your credit rating.
  • You might have to pay a fee to the platform for arranging the loan, even if it is not fully funded. This can mean multiple fees if you have to apply more than once.
  • You might find yourself unable to obtain a loan if you have a poor credit rating or have managed your finances poorly in the past.
  • You might not have the same protections using a peer to peer platform as if you borrowed in other ways. This varies according to how the loans are drawn up and who the lenders are – for example, whether they are institutional investors or private individuals. Ask the platform how this works and how it differs from a normal loan.

How much do peer to peer loans cost?

The interest rates on the loans vary significantly depending on how much of a risk you’re seen as.

  • If you have a very good credit score, you might be able to borrow at an interest rate as low as around 3% but in some cases the rate might be variable, meaning the rate can go up or down each month, so you need to check.
  • If you have a poor credit history, your interest rate could be as high as 30% (or more likely you will be rejected).

Peer to peer platforms also generally charge a fee to arrange the loans.

How do you apply for a peer to peer loan?

To apply for a loan go to one of the lending sites and register, select the amount you want to borrow and over what term.

Then you can see if you’ll qualify for a loan and the interest rate(s) you’ll have to pay.

Peer to peer lenders normally ‘parcel up’ the loans between lots of different people.

Depending on your credit rating and the individual platform, you might be offered less than you want to borrow or you might be offered a certain amount at one interest rate and different rates of interest by other lenders.

Rules and regulations

Peer to peer platforms and some individual lenders, are regulated by the Financial Conduct Authority (FCA).

That means that if you’re unhappy and make a complaint, the business has eight weeks to sort it out.

If, after eight weeks, you’re still not happy, you can ask the Financial Ombudsman Service (FOS) to get involved.

The FOS has official powers to sort out complaints between you and a financial business you’re unhappy with.

If they agree that the business has done something wrong, they can order them to put things right. The service is free to use.

The peer2peer Finance Association (P2PFA) is the UK industry body for peer to peer finance and was set up to ensure high standards in this fast growing industry.

All members must adhere to the rules and operating principles drawn up by the association.

Things to be aware of when applying for a peer to peer loan

Before choosing to apply for a peer to peer loan, be sure to consider:

  • If you default on a peer to peer loan, the company might pass the loan on to a debt collection agency which will chase it on behalf of the lender or lenders. As a last resort, it might go to court.
  • Missing payments or defaulting on a loan will affect your credit rating. Once the credit agreement is in place the peer to peer lending website will register an entry on your credit report in the same way as most other loans.

Alternatives to peer to peer loans

If you’re looking to borrow money, there are a number of other borrowing options worth considering.

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  • Peer to peer loans #1 #month #loan


    #peer to peer loans
    #

    Advertisement

    Peer-to-peer lending, also referred to as social lending, person-to-person lending, microfinance and microloans, is a nontraditional form of lending involving unsecured loans between individuals. This is in contrast with traditional lending, where a bank or other financial institution makes loans to individuals.

    Advertisement

    The low volume of education loans at peer-to-peer lending sites is partly due to the short-term nature of peer-to-peer loans, which typically require short repayment terms ranging from 1 to 3 years. Traditional student loans have a longer-term horizon of 10 to 30 years as well as other terms customized to the need of students, such as in-school deferment of repayment. This has lead to the development of peer-to-peer lending sites that focus on education loans, such as GreenNote.

    Peer-to-peer lending sites may offer one or more of the following services:

    • Documentation of loans. This includes paperwork, such as fully executed promissory notes.
    • Servicing of the loans. This includes collection of payments and reporting the payments (or delinquencies) to credit reporting agencies.
    • Matching borrowers with investors.

    Peer-to-peer lending sites typically fall into two main types:

    • Friends & Family. These sites provide formalized documentation of a loan (e.g. a properly executed promissory note) for a fixed fee. They may also provide servicing (collection of monthly payments) for a percentage of the outstanding balance. The interest rates on these loans are usually lower, sometimes competitive with the interest rates on government education loans.
    • Stranger-to-Stranger. Also known as person-to-person loans, these sites match lenders with unrelated borrowers. Not only do they document the loans, but they also service the loans and sometimes provide a guarantee against default. Usually these sites have minimum credit criteria. The interest rates are usually higher, sometimes competitive with the interest rates on private student loans.

    Advice for Borrowers

    Borrowers should focus on federal first, as federal education loans are cheaper, more available and have better repayment terms. Peer-to-peer lending should only be considered as an alternative to private student loans, and also more expensive forms of credit such as credit cards.

    Potential advantages of peer-to-peer lending over private student loans include:

    • Avoid the need for a cosigner.
    • More personal in that the borrower often gets to make a personal argument for why he or she deserves a loan.
    • Lower credit scores.
    • Fixed rates.
    • More flexible. An education loan from a peer-to-peer lending site may allow you to spend the money on more than just the college’s cost of attendance. The money goes directly to the student, not the school.

    It is important to recognize that a peer-to-peer loan might not get fully funded, or funded at all. Except at friends and family sites, where the lender has a vested interest in the success of the borrower, the lenders are focused on obtaining a reasonable return on their investment. If the borrower asks for too low an interest rate or too much money, they might not attract any lenders.

    Some of the peer-to-peer lending sites let the borrowers provide some background on why they need the money. Often this information is structured, providing information about the degree program, year in school, name of the college and GPA. In some cases the borrowers can post a message to the prospective lenders to tell them how they will use the money, and may include a photograph and recommendations from friends.

    Other Resources

    The Peer-to-Peer Lending Calculator helps lenders evaluate the impact of the risk of default on the returns on investment. Given some details about the loan and the risk of default, it calculates a risk-free rate of return.

    See also Loan Comparison Sites. which are sites that compare the terms of traditional federal and private student loans.

    If you’re considering lending to students to help them pursue their higher education, consider Advice for Peer-to-Peer Education Lenders.


    Peer to Peer Lending Sites: An Exhaustive Review #used #auto #loan


    #peer to peer loans
    #

    The entire US p2p ecosystem in a single list

    Many people like peer to peer lending for its low loan rates. Others celebrate its consistent and generous ROI. But the truth is that neither of these benefits are very profound. For example, while it is crucial to get out of debt (perhaps through a p2p loan), the process isn’t all that fun. Quite the opposite; making those monthly payments can be a real chore.

    This applies to investing as well. Earning a return is key to a healthy retirement, but it really isn’t all that interesting. A dull number on your screen slowly grows over a 2-4 decades until a certain retirement threshold is reached and you’ve “made it” a long time to wait for a party.

    My favorite aspect is something altogether different. What captivates me about peer to peer lending is its transparency and collaboration. Certainly competition exists, but the long storied history of peer to peer lending is really one of people figuring this out together.

    To illustrate this, today I’ll review every peer to peer lending website in the United States, highlighting the collaborative part they play in the overall lending ecosystem.

    Two American P2P Lending Companies

    Many online lending companies have launched in the United States, but only two are purely peer to peer. Only two connect everyday investors to borrowers: Lending Club and Prosper. Additional platforms will launch in the future, but for now these are the sole two.

    Lending Club

    You really can’t talk about peer to peer lending without starting with Lending Club. The industry leader, founded in 2007, has gone on to issue over $9 billion in loans. Their site has the best user interface and the largest 3rd-party investor ecosystem. Recently, Lending Club went public on the New York Stock Exchange, becoming the first publicly traded online lender in history.

    They offer loans between $1000 to $35,000. Interest rates range from 6.6% to 29.9%. Their average loan is for $15,000 and has a 13.4% APR. Read: our Lending Club review for borrowers .

    Lending Club investors: typically earn between 5% and 9%, depending on how much risk is taken on. Read: our Lending Club investor review

    Prosper Marketplace

    Prosper made history when they launched in 2006. They were the first ever American peer to peer lending company. Since then, the company has experienced tremendous growth and success, having recently issued an incredible $3 billion in loans. Recently, they were named by Forbes as one of the most promising companies in America.

    Prosper offers loans between $2000 and $35,000. Interest rates range from 6.6% to 35.9%. The average loan at Prosper is for $13,000 and has a 13.9% interest rate. Read our loan review for Prosper .

    Loans up to $35,000

    Check your rate at both, go with the lower rate.

    Check Your Rate

    Prosper investors: typically earn between 5% and 9.5% depending how much risk is taken on. Read: our Prosper investor review

    P2P Lending News and Education Sites

    A wide variety of news and education sources have sprung up around these two companies.

    Lend Academy

    CrowdFund Insider

    Orchard Platform

    P2PLendingExpert

    Stu Lustman is a credit professional who brings his own value to this space. Furthermore, he has a unique take with peer to peer Bitcoin lending re: his coverage of BTCJam .

    LendingMemo

    Launched in January 2013, this site continues to be a joy and privilege to work on. Thanks for reading 🙂

    Secondary Blogs

    Even though PeerCube and LendingRobot are more known for their savvy p2p tools, they operate blogs on the side that are filled with interesting and helpful information on this investment.

    PeerCube Blog: PeerCube.com/blog

    P2P Lending Investing and Analytics Tools

    NSR Invest

    Probably the main investor analytics site for years has been NSR Invest (originally Nickel Steamroller). NSR offers a fast and robust backtesting tool that allows investors to breakdown the historical loan data in pretty much any way they desire.

    On top of that, they offer great charts of industry growth, the most advanced portfolio analysis in the country (including Prosper), and fund management for accounts over $10,000.

    LendingRobot

    LendingRobot is the biggest auto-investing tool in the space, having received a lot of positive press as of late (TechCrunch ). Their tool automates Lending Club and Prosper investments in a variety of interesting ways. Not only can you auto-invest with filters (video ), but their Estimated Return parameter invests with an algorithm, allowing you to increase your returns without needing to learn filtering at all. They have pre-set filters for conservative and aggressive investment strategies.

    Lately, LendingRobot even added functionality for the Folio secondary market, allowing you to automatically place loans for sale on Folio that, for example, drop a certain amount in FICO.


    Peer to peer loans #provident #loan


    #peer to peer loans
    #

    Advertisement

    Peer-to-peer lending, also referred to as social lending, person-to-person lending, microfinance and microloans, is a nontraditional form of lending involving unsecured loans between individuals. This is in contrast with traditional lending, where a bank or other financial institution makes loans to individuals.

    Advertisement

    The low volume of education loans at peer-to-peer lending sites is partly due to the short-term nature of peer-to-peer loans, which typically require short repayment terms ranging from 1 to 3 years. Traditional student loans have a longer-term horizon of 10 to 30 years as well as other terms customized to the need of students, such as in-school deferment of repayment. This has lead to the development of peer-to-peer lending sites that focus on education loans, such as GreenNote.

    Peer-to-peer lending sites may offer one or more of the following services:

    • Documentation of loans. This includes paperwork, such as fully executed promissory notes.
    • Servicing of the loans. This includes collection of payments and reporting the payments (or delinquencies) to credit reporting agencies.
    • Matching borrowers with investors.

    Peer-to-peer lending sites typically fall into two main types:

    • Friends & Family. These sites provide formalized documentation of a loan (e.g. a properly executed promissory note) for a fixed fee. They may also provide servicing (collection of monthly payments) for a percentage of the outstanding balance. The interest rates on these loans are usually lower, sometimes competitive with the interest rates on government education loans.
    • Stranger-to-Stranger. Also known as person-to-person loans, these sites match lenders with unrelated borrowers. Not only do they document the loans, but they also service the loans and sometimes provide a guarantee against default. Usually these sites have minimum credit criteria. The interest rates are usually higher, sometimes competitive with the interest rates on private student loans.

    Advice for Borrowers

    Borrowers should focus on federal first, as federal education loans are cheaper, more available and have better repayment terms. Peer-to-peer lending should only be considered as an alternative to private student loans, and also more expensive forms of credit such as credit cards.

    Potential advantages of peer-to-peer lending over private student loans include:

    • Avoid the need for a cosigner.
    • More personal in that the borrower often gets to make a personal argument for why he or she deserves a loan.
    • Lower credit scores.
    • Fixed rates.
    • More flexible. An education loan from a peer-to-peer lending site may allow you to spend the money on more than just the college’s cost of attendance. The money goes directly to the student, not the school.

    It is important to recognize that a peer-to-peer loan might not get fully funded, or funded at all. Except at friends and family sites, where the lender has a vested interest in the success of the borrower, the lenders are focused on obtaining a reasonable return on their investment. If the borrower asks for too low an interest rate or too much money, they might not attract any lenders.

    Some of the peer-to-peer lending sites let the borrowers provide some background on why they need the money. Often this information is structured, providing information about the degree program, year in school, name of the college and GPA. In some cases the borrowers can post a message to the prospective lenders to tell them how they will use the money, and may include a photograph and recommendations from friends.

    Other Resources

    The Peer-to-Peer Lending Calculator helps lenders evaluate the impact of the risk of default on the returns on investment. Given some details about the loan and the risk of default, it calculates a risk-free rate of return.

    See also Loan Comparison Sites. which are sites that compare the terms of traditional federal and private student loans.

    If you’re considering lending to students to help them pursue their higher education, consider Advice for Peer-to-Peer Education Lenders.


    Welcome to the International Institute of St #international #institute, #st. #louis, #missouri, #refugees, #immigrants,resettlement #services, #english #classes, #counseling, #translation, #interpretation, #job #placement, #festival #of #nations, #diversity, #cultural, #economic #development, #social #work, #elderly, #human #trafficking, #domestic #violence, #immigration #assistance, #application #prep, #small #business, #financial #literacy, #peer #lending #circle, #community #development #corp, #young #friends, #volunteers


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    The International Institute is St. Louis’ welcoming center for new Americans. Our mission is to help immigrants and their families become productive Americans and champion ethnic diversity as a cultural and economic strength.

    We provide essential community integration services to more than 7,500 immigrants and refugees from 80 countries each year. Our clients range from low-skilled to high-skilled and from non-literate to university-educated. Many are refugees who have fled war-torn countries around the world. We also work to build connections between foreign-born and long-time residents and produce Festival of Nations, our region’s most popular multi-cultural celebration.

    Together, we can improve lives and help strengthen the St. Louis region.

    Upcoming Events

    July 1 – September 4; Pi Pizzeria
    (all locations)
    United in Goodness
    Please join us to celebrate our diversity and all that unites us. On July 1st, we will introduce new menu items to support PROMO & International Institute St. Louis. Come together around pizza and new internationally inspired items from Chef Cary McDowell, and we’ll donate a % of your bill to these organizations which welcome and celebrate diversity, GOODNESS and all that unites our community. Click here for more info.

    July 21 – 7pm – 10pm; Wheelhouse
    50/50 Fridays
    Proceeds benefit the International Institute. Click here for more info.

    Sept. 15-24
    Welcoming Week 2017
    Proceeds benefit the International Institute. Click here for more info.

    Get Involved

    Value of Immigrants: Learn more about local and statewide impact. St. Louis overview ; Feb. 21 PPT briefing. Missouri detailed report.

    Executive Order 13769: Learn More
    New Executive Order – White House: Office of the Press Secretary – March 6, 2017

    Sign up for AmeriCorps 11-month program at IISTL.

    IISTL Tours
    Last Wednesday Monthly at 10 am. Group tours of five or more visitors can be arranged at other times. Use this form for both requests.

    Request a Speaker
    Schedules, especially for the Institute’s Leadership team, are filled far in advance. Notice of 4 months or more will improve the chances of meeting your request. Use this form for requests.

    Rent Event Space
    Event space is available for rental by groups or individuals. First priority goes to collaborating organizations and clients. Use this form for requests.


    Peer to Peer Loans #private #student #loan


    #peer to peer loans
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    Stop Searching and Get Approved Today!

    Compare the highest rated peer to peer lenders offering better rates terms

    Peer-to-Peer Loan Financing Made Easy

    If you are in need of a personal loan, a peer-to-peer loan could be a great financing option for you to consider, if you need that money to be unsecured. Peer-to-Peer lending is also known as person-to-person lending. This type of unsecured financing is different than a conventional bank loan, because it is funded by private investors. This means, instead of you borrowing money directly from a traditional bank or credit union, you instead borrow money from regular people.

    Unsecured P2P loans can be used for any purpose, and have an easy application and funding process. Peer-to-Peer financing can be obtained up to $35,000 with terms ranging from 3-to-5 years. Rates currently start around 6% for excellent credit individuals.

    If you are interested in this type of personal financing, submit your information now. We have experts standing by that would be happy to answer all questions you may have about peer-to-peer lending. There’s no obligation to proceed if you don’t like the results, so get started today.

    Peer to Peer Lending Further Explained

    Peer-to-peer lending is also known as person-to-person lending, P2P, or social lending. This is a non-traditional unsecured loan type that can be right for certain borrowers with good-to-excellent credit. This type of lending is offered using your personal credit history, although funds obtained from a peer-to-peer loan can be used for any purpose.

    Benefits of Peer to Peer Financing Loans

    The benefit of obtaining this type of personal loan. is that it eliminates much of the cost and complexity found in the traditional lending system. Peer-to-Peer lenders connect average borrowers with private investors interested in lending money, taking the bank or credit union out of the equation. By cutting out of the middle man, a p2p lender can save money. These savings can then be passed along to the borrower in the form of a lower interest rate. The private investors lending money, also benefit by earning more off their investment, because there is no bank taking a cut.

    The P2P Loan Application and Funding Process

    Most peer-to-peer lenders will only require you to provide some basic information about yourself in order to determine if you are a good candidate for a loan. This information may include your name, address, date-of-birth, loan amount needed, annual income and a self-rated credit score. Because peer-to-peer lenders offer personal unsecured loan products, they will be looking for a 660 or above credit score to qualify. If you have a lower credit score, or have a high debt-to-income ratio (DTI), you may not achieve favorable results with this type of unsecured loan program.


    Peer to peer loans #credit #card #loans


    #peer to peer loans
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    Advertisement

    Peer-to-peer lending, also referred to as social lending, person-to-person lending, microfinance and microloans, is a nontraditional form of lending involving unsecured loans between individuals. This is in contrast with traditional lending, where a bank or other financial institution makes loans to individuals.

    Advertisement

    The low volume of education loans at peer-to-peer lending sites is partly due to the short-term nature of peer-to-peer loans, which typically require short repayment terms ranging from 1 to 3 years. Traditional student loans have a longer-term horizon of 10 to 30 years as well as other terms customized to the need of students, such as in-school deferment of repayment. This has lead to the development of peer-to-peer lending sites that focus on education loans, such as GreenNote.

    Peer-to-peer lending sites may offer one or more of the following services:

    • Documentation of loans. This includes paperwork, such as fully executed promissory notes.
    • Servicing of the loans. This includes collection of payments and reporting the payments (or delinquencies) to credit reporting agencies.
    • Matching borrowers with investors.

    Peer-to-peer lending sites typically fall into two main types:

    • Friends & Family. These sites provide formalized documentation of a loan (e.g. a properly executed promissory note) for a fixed fee. They may also provide servicing (collection of monthly payments) for a percentage of the outstanding balance. The interest rates on these loans are usually lower, sometimes competitive with the interest rates on government education loans.
    • Stranger-to-Stranger. Also known as person-to-person loans, these sites match lenders with unrelated borrowers. Not only do they document the loans, but they also service the loans and sometimes provide a guarantee against default. Usually these sites have minimum credit criteria. The interest rates are usually higher, sometimes competitive with the interest rates on private student loans.

    Advice for Borrowers

    Borrowers should focus on federal first, as federal education loans are cheaper, more available and have better repayment terms. Peer-to-peer lending should only be considered as an alternative to private student loans, and also more expensive forms of credit such as credit cards.

    Potential advantages of peer-to-peer lending over private student loans include:

    • Avoid the need for a cosigner.
    • More personal in that the borrower often gets to make a personal argument for why he or she deserves a loan.
    • Lower credit scores.
    • Fixed rates.
    • More flexible. An education loan from a peer-to-peer lending site may allow you to spend the money on more than just the college’s cost of attendance. The money goes directly to the student, not the school.

    It is important to recognize that a peer-to-peer loan might not get fully funded, or funded at all. Except at friends and family sites, where the lender has a vested interest in the success of the borrower, the lenders are focused on obtaining a reasonable return on their investment. If the borrower asks for too low an interest rate or too much money, they might not attract any lenders.

    Some of the peer-to-peer lending sites let the borrowers provide some background on why they need the money. Often this information is structured, providing information about the degree program, year in school, name of the college and GPA. In some cases the borrowers can post a message to the prospective lenders to tell them how they will use the money, and may include a photograph and recommendations from friends.

    Other Resources

    The Peer-to-Peer Lending Calculator helps lenders evaluate the impact of the risk of default on the returns on investment. Given some details about the loan and the risk of default, it calculates a risk-free rate of return.

    See also Loan Comparison Sites. which are sites that compare the terms of traditional federal and private student loans.

    If you’re considering lending to students to help them pursue their higher education, consider Advice for Peer-to-Peer Education Lenders.


    Peer to Peer Lending Sites: An Exhaustive Review #home #loan #calculators


    #peer to peer loans
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    The entire US p2p ecosystem in a single list

    Many people like peer to peer lending for its low loan rates. Others celebrate its consistent and generous ROI. But the truth is that neither of these benefits are very profound. For example, while it is crucial to get out of debt (perhaps through a p2p loan), the process isn’t all that fun. Quite the opposite; making those monthly payments can be a real chore.

    This applies to investing as well. Earning a return is key to a healthy retirement, but it really isn’t all that interesting. A dull number on your screen slowly grows over a 2-4 decades until a certain retirement threshold is reached and you’ve “made it” a long time to wait for a party.

    My favorite aspect is something altogether different. What captivates me about peer to peer lending is its transparency and collaboration. Certainly competition exists, but the long storied history of peer to peer lending is really one of people figuring this out together.

    To illustrate this, today I’ll review every peer to peer lending website in the United States, highlighting the collaborative part they play in the overall lending ecosystem.

    Two American P2P Lending Companies

    Many online lending companies have launched in the United States, but only two are purely peer to peer. Only two connect everyday investors to borrowers: Lending Club and Prosper. Additional platforms will launch in the future, but for now these are the sole two.

    Lending Club

    You really can’t talk about peer to peer lending without starting with Lending Club. The industry leader, founded in 2007, has gone on to issue over $9 billion in loans. Their site has the best user interface and the largest 3rd-party investor ecosystem. Recently, Lending Club went public on the New York Stock Exchange, becoming the first publicly traded online lender in history.

    They offer loans between $1000 to $35,000. Interest rates range from 6.6% to 29.9%. Their average loan is for $15,000 and has a 13.4% APR. Read: our Lending Club review for borrowers .

    Lending Club investors: typically earn between 5% and 9%, depending on how much risk is taken on. Read: our Lending Club investor review

    Prosper Marketplace

    Prosper made history when they launched in 2006. They were the first ever American peer to peer lending company. Since then, the company has experienced tremendous growth and success, having recently issued an incredible $3 billion in loans. Recently, they were named by Forbes as one of the most promising companies in America.

    Prosper offers loans between $2000 and $35,000. Interest rates range from 6.6% to 35.9%. The average loan at Prosper is for $13,000 and has a 13.9% interest rate. Read our loan review for Prosper .

    Loans up to $35,000

    Check your rate at both, go with the lower rate.

    Check Your Rate

    Prosper investors: typically earn between 5% and 9.5% depending how much risk is taken on. Read: our Prosper investor review

    P2P Lending News and Education Sites

    A wide variety of news and education sources have sprung up around these two companies.

    Lend Academy

    CrowdFund Insider

    Orchard Platform

    P2PLendingExpert

    Stu Lustman is a credit professional who brings his own value to this space. Furthermore, he has a unique take with peer to peer Bitcoin lending re: his coverage of BTCJam .

    LendingMemo

    Launched in January 2013, this site continues to be a joy and privilege to work on. Thanks for reading 🙂

    Secondary Blogs

    Even though PeerCube and LendingRobot are more known for their savvy p2p tools, they operate blogs on the side that are filled with interesting and helpful information on this investment.

    PeerCube Blog: PeerCube.com/blog

    P2P Lending Investing and Analytics Tools

    NSR Invest

    Probably the main investor analytics site for years has been NSR Invest (originally Nickel Steamroller). NSR offers a fast and robust backtesting tool that allows investors to breakdown the historical loan data in pretty much any way they desire.

    On top of that, they offer great charts of industry growth, the most advanced portfolio analysis in the country (including Prosper), and fund management for accounts over $10,000.

    LendingRobot

    LendingRobot is the biggest auto-investing tool in the space, having received a lot of positive press as of late (TechCrunch ). Their tool automates Lending Club and Prosper investments in a variety of interesting ways. Not only can you auto-invest with filters (video ), but their Estimated Return parameter invests with an algorithm, allowing you to increase your returns without needing to learn filtering at all. They have pre-set filters for conservative and aggressive investment strategies.

    Lately, LendingRobot even added functionality for the Folio secondary market, allowing you to automatically place loans for sale on Folio that, for example, drop a certain amount in FICO.