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Author of the article is confusing "borrower" facing data with "lender" facing data. Lender interest rate is what lender gets and not what borrower pays. 5% le

by akg_67 13y ago

Author of the article is confusing "borrower" facing data with "lender" facing data. Lender interest rate is what lender gets and not what borrower pays. 5% lender interest rate is correct because that is what lender gets. Lender doesn't get service fees and origination fee. It will be very confusing for lender if Zidisha published 25% borrower interest rate as lender may assume that they are getting 25% interest rate which will be incorrect. If Zidisha was telling borrowers that they pay 5% interest rate or telling lenders that they receive 25% interest rate then that will be misleading. Author needs to spend some time understanding the terminology and nuances of lending/debt market from both borrower and lender view. This is the most confusing aspect most people new to lending side face as they are only used to seeing borrower side. Lender side view is very different from borrower side view.

misterjangles 13y ago
I don't think he confuses the two - he talks about both in detail. The issue is with the concept if the flat interest rate combined with service fees and signup fees that make the advertised borrower rate misleading. But there is a likelihood that not everybody understands it. Journalists and bloggers just throw out the 5% figure without specifying what it means because it makes for a nice sounding blurb.
pbhjpbhj 13y ago
Zidisha could explicitly state the borrower and lender interest rates and give an average and spread for those rates when all fees are taken in to account. They could include APRs or AERs or whatever too. Zidisha is surely marketing themselves to lenders on the basis that they offer a good rate to borrowers, that's supposed to be a motivation to lenders to participate. Interestingly the Wikipedia page figures seem [at a glance] to say that in some countries less than 50% of loans are even repaid.

by akg_67 13y ago

misterjangles 13y ago

I don't think he confuses the two - he talks about both in detail. The issue is with the concept if the flat interest rate combined with service fees and signup fees that make the advertised borrower rate misleading. But there is a likelihood that not everybody understands it. Journalists and bloggers just throw out the 5% figure without specifying what it means because it makes for a nice sounding blurb.

pbhjpbhj 13y ago

Zidisha could explicitly state the borrower and lender interest rates and give an average and spread for those rates when all fees are taken in to account. They could include APRs or AERs or whatever too. Zidisha is surely marketing themselves to lenders on the basis that they offer a good rate to borrowers, that's supposed to be a motivation to lenders to participate. Interestingly the Wikipedia page figures seem [at a glance] to say that in some countries less than 50% of loans are even repaid.