Has anyone tried these new online P2P lending platforms and had any success as either a lender or a borrower?
Pardon me but what exactly is P2P lending. This is the first time I have come across this term. If this is the same as micro lending with a high interest rate then we have that here. High interest rate is usury so I wonder why even the pawnshop is engaging in that - 2% up to 5% of interest rate per month charged on the loand with a pawned item.
Haven't tried them myself however I have had detailed discussions with quite a few fellow investors who have tried them. Basically it's like playing the lottery, a huge percentage of loans have some payment difficulties... pretty much exactly what you would expect when you loan money to someone who can't get their loan from a bank/credit card/relative/friend. Some of the platforms do their screening well, most don't. And even those that do it well, only the very highest rating the borrower can get is a slight indication that they might have some chance of paying the loan back. Most of the people I've talked to are fairly close to zero profit/loss. The best strategy seems to be to diversify like no tomorrow and only invest in the highest rated loans... but even then the defaults are a thing you will be very familiar with.
I've neither borrowed nor lent any money on P2p platforms. On some blogs I noticed that they encourage people who have some cash to invest in P2P because of the relatively higher interest rates but since there are risks involved, some people will not pay back their loans, the likelihood of losing your money is pretty high. On P2P platforms it's wiser to be the borrower . . .
I havent used any P2P lending sites, but that's mainly because I don't need to, and if I did need a loan I'd be able to get one from the main street banks. While I've nothing against sites like this, I would have to think very carefully about the pros and cons of using a site like this as a borrower, as a lender its something I wouldn't even consider.
P2P lending is peer to peer lending and is basically where you sort out a loan between two people without going to banks or loan companies. You tell me what you want the money for, how much you need, how your going to pay me back, and then I decide if I'm willing to lend it you or not, and that's basically it. The good thing is that if a person can't get a loan from a bank, they may still be able to get one on a P2P site as it doesn't go off a credit rating has such.
So P2P is peer to peer that works like crowdfunding. You get a moneyed person and match it with a person who needs money. Okay, clear to me now. I don't think that will prosper here because most borrowers here have that habit of not paying on time or simply reneging on their responsibility. Our country has one of the higest in statistics for delinquency in credit card payments. That's why lawyers for bad debts are having a good business in running after those delinquents.
The same problem exist everywhere. If you can get a loan from a bank, you get it from a bank. If you can't then you probably try to get it from family/friends. And then if you can't get it from any of that you go to these P2P lending sites. If someone can't get a loan from a bank/friend/family/credit card company then I don't think I want to give him any money either since the chances of that cash coming back is very low.
And that is exactly why if I was a lender I wouldn't even consider using a site like this, as for most people, in fact I'd say the majority of people that use a site like this it will be a last resort. They've tried to get a loan from everywhere and can't, so now they come to a P2P site. Why would I want to take that kind of risk as a lender?
Yup, the high yield looks really attractive though and that's why most people give it a try. It's great if you can find people who use the websites the way they were designed... ie. borrow a couple hundred because you really need it and pay back as soon as your salary comes. And some websites do screen their clients a little better than others... like you can find out if they have a verified regular income etc. But very risky business in any case. I don't suggest anyone to try it other than with money that you are willing to lose.
