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In what case would you be able to fool Prosper or LendingClub but not a traditional credit card company? Couldn't they just adopt similar lending standards? I

by nugget 10y ago

In what case would you be able to fool Prosper or LendingClub but not a traditional credit card company? Couldn't they just adopt similar lending standards? I always viewed p2p as just a more efficient way of mimicking the lending and interest-collecting functions of a bank/credit card company.

pbreit 10y ago
Except some of the decision making is being performed by amateurs.
- nugget 10y ago
  I let Prosper and LC automatically invest for me. All I am providing is capital. The platforms provide borrower vetting and rating.
Unklejoe 10y ago
Additionally, I don't think that LC or Prosper can afford to chase after fraudsters like the credit card companies can.
- kingnothing 10y ago
  LC does. I'm widely diversified on their automated system, but I have occasionally seen a credit for about 10% of a given loan that had been charged off, along with maybe 10% of that charged as a collections fee to me.
jlarocco 10y ago
> I always viewed p2p as just a more efficient way of mimicking the lending and interest-collecting functions of a bank/credit card company. How? Seems less efficient to me. In any case, I thought one of the advantages (perhaps the biggest advantage) of borrowing through these companies is that they have less stringent standards than banks and credit cards.
dragonwriter 10y ago
> In what case would you be able to fool Prosper or LendingClub but not a traditional credit card company? Couldn't they just adopt similar lending standards? Traditional credit card lending standards are adopted because the issuer is the lender, and directly bears the default risk. On a peer-to-peer service, the money being lent is Other People's Money, and Other People bear the default risk. The incentive, then, is to leave it to those Other People to set lending standards that will protect their money.
- deleted 10y ago
  [deleted]
x0x0 10y ago
Traditional card companies have an additional defense. Particularly now that there's very few big card issuers (chase, wellsfargo, citi, cap1, barclay, boa, usbank, amex, discover), they have blacklists if you include them in a bankruptcy. Amex and citi are 10 years I think. This can make re-establishing credit far more painful. There are obviously alternatives such as debit cards and credit unions, but those will not come with the same benefits as the cards from national issuers. I don't think being blacklisted from Prosper or LendingClub for IIB will serve as much of a deterrent.

by nugget 10y ago

pbreit 10y ago

Except some of the decision making is being performed by amateurs.

nugget 10y ago
I let Prosper and LC automatically invest for me. All I am providing is capital. The platforms provide borrower vetting and rating.

Unklejoe 10y ago

Additionally, I don't think that LC or Prosper can afford to chase after fraudsters like the credit card companies can.

kingnothing 10y ago
LC does. I'm widely diversified on their automated system, but I have occasionally seen a credit for about 10% of a given loan that had been charged off, along with maybe 10% of that charged as a collections fee to me.

jlarocco 10y ago

> I always viewed p2p as just a more efficient way of mimicking the lending and interest-collecting functions of a bank/credit card company. How? Seems less efficient to me. In any case, I thought one of the advantages (perhaps the biggest advantage) of borrowing through these companies is that they have less stringent standards than banks and credit cards.

dragonwriter 10y ago

> In what case would you be able to fool Prosper or LendingClub but not a traditional credit card company? Couldn't they just adopt similar lending standards? Traditional credit card lending standards are adopted because the issuer is the lender, and directly bears the default risk. On a peer-to-peer service, the money being lent is Other People's Money, and Other People bear the default risk. The incentive, then, is to leave it to those Other People to set lending standards that will protect their money.

deleted 10y ago
[deleted]

x0x0 10y ago

Traditional card companies have an additional defense. Particularly now that there's very few big card issuers (chase, wellsfargo, citi, cap1, barclay, boa, usbank, amex, discover), they have blacklists if you include them in a bankruptcy. Amex and citi are 10 years I think. This can make re-establishing credit far more painful. There are obviously alternatives such as debit cards and credit unions, but those will not come with the same benefits as the cards from national issuers. I don't think being blacklisted from Prosper or LendingClub for IIB will serve as much of a deterrent.