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Thread: P2P Investing

  1. #1
    Solid Member uaktags's Avatar

    P2P Investing !!!

    I'm curious if anyone here has had any experience in Peer to Peer Investing or P2P Lending. The idea, for those that don't know, is that instead of the traditional sense of individuals seeking loans from Banks, they seek loans via their peers. The benefits for the borrorow is that they can normally get a much lower rate (3%, 5%, etc) which the idea is to use towards things that a normal bank wouldn't allow you for (Credit Debt consolidation, Major Purchase, Student Loan refinancing). Many of the websites that facilitate (Upstart, LendingClub, etc) that I've seen seems to vet the borrowers pretty strictly (I can't even take out a loan because I don't have a Bachelors degree, though I'm of "phenomenal standing" they said) by comparing things such as FICO score, Education, etc.

    What does it mean in a money-making? Well as I said, we are the lenders, not the bank. So we provide the loan or a portion of the loan, and we receive the interest back along with our loan. What I've seen is the loan are between $3,000-$20,000 with interest ranging in categories from low interest 3-5% i've seen to higher regular rates like 15-20%. Obviously we'd want to be lenders for these higher rates, but that's where the fun comes in. It's risk/reward for any investment and this is no different. Lower rates are for the better payers, higher for the lower FICOs/spottier borrowers. As with any investment you can lose all of your investment (borrower defaults).

    So yea, I've been looking at it, unfortunately the State of PA doesn't allow me to lend on the primary markets, and the (FolioFn?) secondary market for notes seems to be even more volatile. I'm curious if anyone else here has taken a gander at this as an additional investment vehicle and any insight you can share?

  2. #2
    Administrator Martin Kay's Avatar
    Well that's not something new. I've recently heard about a new start-up can't recall the name but they managed to raise about $10M. Currently the whole concept of P2P landing is working only in the US, and since I'm not a US citizen I don't really understand how it work but I know it's becoming popular. My suggestion - play your cards slowly. Find out more about it on other forums more related to that niche. Remember that there would always be lenders with bigger pockets than you, so I'm guessing you'll have difficulties achieving high returns at first. That's way I think you should really learn more about it before entering this biz
    “Don't believe anything you read on the net. Except this. Well, including this, I suppose.” ― Douglas Adams

  3. #3
    Moderator Kolyo's Avatar
    I think also that the idea is maybe viable but Martin is right, if you are lender you won’t achieve results better than some bank deposits, and if you are borrower maybe it can be a benefit for you but again you also said that there are very strict rules. So I don’t think that this finance innovation will give much at least in near future.
    "The goal of a successful trader is to make the best trades. Money is secondary." - Alexander Elder

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