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> Given that LC is not a depository institution, the only way I see them providing lower interest rates is they have figured out a cheaper source of funding - o
by nether 12y ago
> Given that LC is not a depository institution, the only way I see them providing lower interest rates is they have figured out a cheaper source of funding - or burning investor money to do this which is not sustainable and the big banks will defeat them eventually.
LC is peer to peer lending. I have $47k invested in LC notes. They save money by having fewer brick & mortar offices and mainly relying on credit score to assess borrowers.
- foobarqux 12y agoThere are several online banks with no brick-and-mortar presence.
- conistonwater 12y agoIf they mainly rely on credit scores, how will they remain competitive with lenders that have more information about the borrower, or has the resources to develop a business relationship with the borrower? Everybody else has access to credit scores too, you know.
- rtpg 12y agoit might be that credit scores are cheap enough (or rather, finding more information is expensive enough) that they're the local maximum in terms of possible profit from the transaction.
- radmuzom 12y agoI assume you have a high risk appetite. If there is a downturn situation and lot of loans given out by LC default, then they may suffer heavy losses and go out of business. Given that they are not regulated, there is no guarantee on deposits by the Fed so you won't get any money back.