Peer to Peer Loans..
Peer to Peer Loans..
Author
Discussion

Shuvi Tupya

Original Poster:

24,460 posts

263 months

Thursday 30th June 2011
quotequote all
http://uk.zopa.com/ZopaWeb/public/lending/lending-...

Anyone looked into this at all? I am considering getting involved as a lender as the rates look pretty inviting.

The premise is quite simple, you are lending money directly to people rather than letting the bank lend your money to them and taking the profit..

Bad idea??




ILoveLamp

2,664 posts

191 months

Thursday 30th June 2011
quotequote all
You can have bad debts, whereby the contract is between you and the person you have loaned the money to and this would become a civil matter.

There are credit checks against who you lend to, you can chose to lend to a low risk (low return) or high risk (high return).

I've not done it yet, though, tempted.

Magic919

14,126 posts

217 months

Thursday 30th June 2011
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Quite a few guys on here do it. Finance section might reach them better.

toast boy

1,242 posts

242 months

Thursday 30th June 2011
quotequote all
Where would you stand with late payments and bad debt? How would the contract be enforced? Presumably there would be a limit to how much you could lend before requiring a consumer credit licence?

My first thoughts are that I'd be cautious about doing this, what motives would people have to use this system? Is it because it's cheaper or is it because they don't want to be involved with a bank? Also, banks are able to offset the risk of bad debt with the more safe clients, how would this work on a smaller scale? Presumably you'd be more exposed?

Shuvi Tupya

Original Poster:

24,460 posts

263 months

Thursday 30th June 2011
quotequote all
toast boy said:
Where would you stand with late payments and bad debt? How would the contract be enforced? Presumably there would be a limit to how much you could lend before requiring a consumer credit licence?

My first thoughts are that I'd be cautious about doing this, what motives would people have to use this system? Is it because it's cheaper or is it because they don't want to be involved with a bank? Also, banks are able to offset the risk of bad debt with the more safe clients, how would this work on a smaller scale? Presumably you'd be more exposed?
The banks are not lending to small business like they used to so i am guessing those are the sorts of people that are using this service. I assume that the loan applicants are credit checked but i could well be wrong.

I would start very small, i understand that if someone wants to borrow £1000, the money might come from ten different people who are spreading the risk, which would help.


toast boy

1,242 posts

242 months

Thursday 30th June 2011
quotequote all
Spreading the risk among lenders is a good idea, but will your money be spread over a number of borrowers also, or just one? Unfortunately even people who credit check well can default on a loan, would you be responsible for the underwriting analysis yourself?

davido140

9,614 posts

242 months

Thursday 30th June 2011
quotequote all
I've looked at this too and fancied putting a bit of money in to see how it went, some of the returns can be pretty healthy.

The main question I have is to what degree is risk shared with other lenders, for example a £1000 loan, to a high risk applicat, If I'm shareing that risk with 9 others and my exposure is only £100 it seems a far more attractive proposal on the loans being a one to one transaction, so much so that spreading a few 1000 around in medium or maybe high risk loans, provided it's over a LOT of loans may be quite attractive.

Shuvi Tupya

Original Poster:

24,460 posts

263 months

Thursday 30th June 2011
quotequote all
^^ my thoughts too!

(bump)

anonymous-user

70 months

Thursday 30th June 2011
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I have been a lender from the early days

the vetting of would be borrowers seems better now - certainly in terms of rate of delinquency its better on my loan book now than ever before

I limit the amount I will lend to any one borrower to the minimum allowed, a crisp tenner only.

seems to be enough demand to keep my bit loaned at all the time at rates I am happy with

Shuvi Tupya

Original Poster:

24,460 posts

263 months

Thursday 30th June 2011
quotequote all
JPJPJP said:
I have been a lender from the early days

the vetting of would be borrowers seems better now - certainly in terms of rate of delinquency its better on my loan book now than ever before

I limit the amount I will lend to any one borrower to the minimum allowed, a crisp tenner only.

seems to be enough demand to keep my bit loaned at all the time at rates I am happy with
Do you use the organisation i linked too, or are there better ones out there? Also, if you don't mind me asking, what rate have you decided you are happy with at your current risk level?