Peer to Peer Lending - Discretionary Investing

(2) Better Interest Rate - By avoiding banks and borrowing from a peer-to-peer lender, you will be able to obtain a loan at a lower interest rate. This is because social lenders have lower overhead costs than banks do. Lower overhead results in better terms for borrowers.

 

(3) Three Year Repayment Schedule - Most peer-to-peer lenders schedule their loans with three-year repayment schedules. This means that your monthly loan payments are more affordable. Conversely, most signature loans and payday loans have very short repayment schedules. Typically, those loans are due to be paid in full by your next payday. Longer repayment schedules take a lot of the pressure off of the borrower to repay the loan quickly.

 

Obtaining an unsecured loan via one of the peer-to-peer lending companies is an excellent alternative to traditional banks. You stand a better having your loan application accepted. You will likely get a loan at a lower interest rate. You will have ample time to repay the loan. Peer-to-peer loans are am excellent option for those people seeking an unsecured loan.

 

If you would like more information about obtaining a peer-to-peer loan...

Peer to peer lending is a new type of lending that involves individuals lending money to each other. The SEC has made this type of business a bit tougher for those involved.

In the beginning of peer to peer lending, the industry's regulation was lax. Loans were issued for amounts ranging from $1,000 to $25,000 over a three year period. Borrowers found these loans to be ideal for the purposes of debt consolidation, small business loan, or just a small personal loan. Lenders like the return on their investment which could range from 6% to 19%. The transaction issued by the banks involved is a promissory note between lenders and borrowers. Furthermore, there is often a secondary market allowing lenders to trade notes. The banks involved are considered to be non traditional because they are purely based on the internet and allow the trading of these notes. The governing of notes was completely in the hands of the banks involved and had no governmental involvement.

In the last year, the SEC has stepped in and put a hold on all transactions for the industry. The SEC stance on the industry was the banks involved were issued unregistered securities. More specifically in accordance to the Securities Act of 1933 which bars the mere offer to sell a note without having the correct registration statement filed with the SEC. The offense is punishable by law and is in place to protect investors.

The effect for the industry was devastating. Many of the in funding loan applications had to be referred to other traditional forms of lending and represented a huge loss for all industry players. The two largest sites, Lending Club and Prosper, had to halt all lending activities. Other sites like Zopa, based in the UK, completely withdrew from the US market. The loans already issued were still honored and potential investors were turned away with little information.

Today, Lending Club seems to be the only one back up and running. They have filled all the necessary paperwork with the SEC and have been granted permission to once again issue peer to peer loans.