Peer to Peer Lending: The Latest on the Newest Lending System

By
Mortgage and Lending with Sun Pacific Mortgage and Real Estate DRE#01014873/NMLS#361315

P2P Lending

The Newest Details on the Newest Lending System


To truly market yourself to investors, you must first think like an investor. For instance, no investor will want to get involved with something that sounds as if it may fall through or sounds like it’s something they can’t rely upon. There was once a time when coupon clipping for bonds was the way to dip your toes in, so to speak, to test the water. However, nowadays there are a hundred ways to invest and see returns quickly. Many have invested in Real Estate, others in social media they think will succeed and others have turned their eye to “P2P” investing.

P2P investing is also knows as peer-to-peer lending. While this has 
actually been around for quite some time, it has just recently become consistent enough to be present in a bigger number of investors’ agenda. Peer-to-peer lending is essentially making personal loans through the internet, using lending companies such as LendingClub.com orProsper.com.

The scoop on these “middle-men” websites is that they act as a search engine for your investment. It links what you want to invest to and matches you to people who are in need of it or simply want to refinance/consolidate credit card debt, etc. This is something I had yet to hear about when I read up on it this morning in Forbes. As I’m sure you yourself are thinking, as I did myself, “How can you trust a website with you money and expect that you will see a return?” Relying on the internet for purchases and research is one thing, but investments are the next step.

The largest P2P lender is San Francisco’s Lending Club. Aside from their mainstream site they also host many other microlending sites. Their loans are, generally speaking, low-rate and/or non-interest-bearing loans. They are able to do this by going to people in emerging economies. Since inception the two “biggies”: Lending Club and Prosper have loaned more than a billion dollars for over 100,000 loans.

These sites allow you to search through hundreds of loans they are trying to match up/have to offer.  Each loan is shown with its risk rating, term of months and rate of return. Loans are also rated based on the borrower’s FICO score and proprietary analysis.

The downfall to websites such as this is that acceptance into them is based on credit. CEO of Lending Club, Renaud Laplanche, states that the firm declines approximately ninety percent of all borrower applications, focusing on the small ten percent with the best credit. For the lenders this is often a good thing because it weeds out the borrowers who are ‘less reliable’ on paper. However, for those looking to borrow but have a foreclosure on their credit, a bankruptcy or just bad credit over time, this system is not advantageous.

For those of you who need a loan and your credit isn’t sterling for whatever reason, some other reason you were turned down for loan approval, there are still other options available to you: Hard Money loans are a great resource to utilize and credit is not taken into account with these. Our Borker offers such loans as a Broker of Hard Money, having many Private individuals who invest in Real Estate. For more information on our loans, be sure to visit the website athttp://www.sunpacmortgage.com and like us on Facebook to get our daily posts, market updates, tips, etc!


 

Lynn Tardibuono – Flipper Chick- Real Estate Agent and Co-Owner of Sun Pacific Mortgage and Real Estate.  Serving Sonoma County since 1988.  Her number is (707)523-2099 and you can also visit our redesigned website at http://www.sunpacmortgage.com Also be sure to like us on facebook! Click this link!                                        DRE license #01014873

Comments (2)

Susanna Haynie
CO-RE Group, LLC -Real estate sales and services - Colorado Springs, CO
Colorado Springs Realtor GRI CNE MCNE ePro MRP

I have dabbled in Prosper before and have done ok I guess - thanks for introducing us to other options.

Jun 07, 2012 09:40 AM
Lynn Tardibuono
Sun Pacific Mortgage and Real Estate - Santa Rosa, CA
Sun Pacific Mortgage and Real Estate

Always a pleasure. I love adding as much diversity to mine and others' knowledge of lending and borrowing avenues. Thanks for reading. 

Jun 08, 2012 07:04 AM