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Thanks for the breakdown. I've looked at loaning on Prosper and Lending Club. They both focus on our credit reporting system which in my opinion is an absolute
by mrjatx 13y ago
Thanks for the breakdown. I've looked at loaning on Prosper and Lending Club.
They both focus on our credit reporting system which in my opinion is an absolutely miserable metric of reliability. I don't like the thought of not being able to assist someone with their cause because they missed a few phone bills 3 years ago. It should be purely at the discretion of the person providing the loan.
From what I understand you can't even join Lending Club without a near impeccable credit score. And at that point, why would you join as opposed to heading to your credit union for a personal loan?
I just don't see the point in what they're offering.
Anyway, that's a tangent.
- jkurnia 13y agoHi mrjatx, Domestic P2P lenders like Lending Club and Prosper may be able to shave a fraction of the cost of borrowing within the US. But I think the real windfall to be gained from P2P lending is where the local alternatives are most expensive and inefficient. For small loans to low-income people in developing countries ("microfinance"), the global average interest rate is about 40%. It is not necessarily profiteering; their model is just incredibly inefficient. Even zero-interest Kiva loans cost more than 30% on average to the borrower, simply because the local banks that manage the loans need to charge that much to cover their operating costs. Zidisha bypasses all that by offering a do-it-yourself microfinance marketplace. Our operating costs are roughly 5% of the value of the loans, versus the 40% or so that is traditional in this sector. The savings get passed on to borrowers and lenders, who are free to negotiate the interest rates they find appropriate for each loan.