Peer to Peer Lending

Financial and social change go hand in hand. Since the internet has grown over the past 20 years, information has become increasing easy to obtain. Because of this, peer to peer lending online is now a viable form of investing. Peer-to-peer lending is also sometimes referred to as person-to-person lending, “P2P” or social lending.

Under the P2P model, lending occurs directly between individuals. This is advantageous for at least three reasons:

1. No “middleman”. When the middleman (bank) is taken out, transactions are simplified. Loans involve less paperwork and occur much more quickly. While most peer to peer lending services use some sort of company or lending platform to broker the loans, the fee structures are typically modest. This benefits both borrowers and lenders.

2. Lower interest rate. Because no bank is involved, there are fewer service costs. This translates to lower interest rates for borrowers.

3. Opportunity to make money. Since P2P lending involves persons, not institutions, private individuals can become lenders and earn significant interest on their money. In many cases, the loan interest rates are significantly higher than alternatives such as taxable bonds, or cash equivalents like CDs or money market funds.

Here are a number of postings on P2P lending on DINKsfinance:

1) Our review of Peer to Peer lending companies Prosper.com and LendingClub.com.

2) We considered putting $70,000 into prosper.com, however this proved to be a bad idea as prosper has been experiencing a high degree of defaults and has suffered from allegations of misappropriated lender funds.

3) There is also a discussion of the bidding and set up processes at Prosper.com.

4) Finally, peer to peer and micro lending models can also be powerful engines for community development.