P2P Lending
Definition and description from http://www.p2p-weblog.com/50226711/p2p_borrowers.php
See the full entry on P2P Finance for a broader context.
Description
P2P Lending
From the P2P Weblog at http://www.p2p-weblog.com/50226711/p2p_lending_overview.php
"P2P lending is a new application for P2P services and technology. It directly connects and provides benefits to individual lenders and borrowers. P2P lending bypasses banks and other formal financial institution. It's often called Social Lending, since part of its appeal is the person to person nature of the service.
P2P lending services are not financial institutions. They do not guarantee loans or rates. They are an exchange or intermediary that facilitates the matching of lenders and borrowers and the transfer of funds and payments.
The service may include social networking features, such as photos, borrower Q&A, friends, borrower recommendations, community groups, and listing sharing. Loans are generally small, typically $1,000 to $25,000 and spread out over many lenders who can loan as little as $50." (http://www.p2p-weblog.com/50226711/p2p_lending_overview.php)
P2P Lending Borrowers
"P2P lending borrowers pay lower interest rates since there is no bank overhead. Loan payments are automatically withdrawn from the borrower's regular bank account.
P2P lending is similar in many ways to eBay. Borrowers create a listing where they specify the amount, loan duration, and loan interest rate they seek. Additional information can include the reason for the loan and other personal comments. Listings may be able to be watched, emailed, linked to, bookmarked, promoted, or even reported if improper.
There is a financial valuation that can include a personal budget, income and asset verification, and credit check, to determine the credit worthiness of a borrower. The lower a person's credit risk, the lower their interest rate and loan payment will be.
Lenders bid on borrower offers. Upon a successful bid lender funds are automatically deposited into the borrower's account." (http://www.p2p-weblog.com/50226711/p2p_borrowers.php)
P2P Lenders
"Lenders on the P2P lender sites receive excellent returns compared to bonds plus the satisfaction of knowing they are directly helping other individuals just like them.
Lenders can search for borrowers by a variety of factors, such as keywords, type of loan, credit criteria, and amount of loan funded.
Lenders can easily spread their loans among multiple borrowers. Such diversification ensures a relatively low risk and reliable return.
Loan payments are automatically deposited in the lender's bank account. P2P lender services employ collection agencies to maximize payout. Delinquent and defaulted accounts are reported to the main credit reporting agencies." (http://www.p2p-weblog.com/50226711/p2p_lenders.php)
More Information
A directory of Social Lending initiatives is maintained here at http://www.wikiservice.at/fractal/wikidev.cgi?EN/BarCampBank/BankAndFinanceWatch