centernetworks.com — The Social Futures Observatory and Zopa released a study entitled, "Social lending the next Web 2.0 phenomenon." The study looked at a number of Social Lending players, and used Zopa, the online marketplace where people meet to lend and borrow money, as a case study. Zopa currently has 105,000 members in the UK.
Nov 25, 2006 View in Crawl 4
killdashnineNov 26, 2006
I don't get it. Many people are already in too much debt. It seems to me that frivolous loans of sizable amounts of money could end up with investors getting the shaft when it comes to pay back the loans.Credit Unions are still a good alternative to regular banks that people have alleged want to put people into debt. Living within one's means helps even more, even though it's hard to do.
fishdanNov 26, 2006
I saw him on 60 Minutes, which should be online at CBS or youtube
mugenkeijiNov 26, 2006
No kidding. This is the quintessence of the adverse selection problem: <a class="user" href="http://en.wikipedia.org/wiki/Adverse_selection">http://en.wikipedia.org/wiki/Adverse_selection</a>
ulyssesytNov 26, 2006
it's not the same thing, or the same scale, or the same population. for starters, the microcredit is often a few dozen dollars, lent at almost no interest. the lendees have no other credit, are carefully monitored by a lending institution, and if in default must surrender the goods bought with the credit.is microcredit succesful? only in some places, like the one you quoted. in other places in the world, it's been a dismal failure.
gregwbrooksNov 26, 2006
I can't speak to the UK leader Zopa's success, but Prosper works quite well. Lenders (that'd be me) have full control over who they choose to lend to. Borrowers also have a degree of control they lack in a traditional lending situation because competition for the loan helps drive rates down a bit. Everyone wins.Are some of them hard-luck cases that no bank would ever touch? Absolutely - and they pay a commensurately higher rate of interest for their loans. Remember, this is unsecured debt, which means that although you *can* go through a collections process, file suit, etc if they stiff you, you generally can't say "well, you bought this thing with the money I loaned you and since you're not paying me back, I get to take the thing." Unsecured debt is always more risky than secured debt, which is why traditional banks (which are, in general, very conservative in their lending practices) don't mess with it much.As a lender (actually, I pool my cash with others in a fund that we lend out), I like the idea of spreading my risk. I can completely control my risk exposure by choosing to loan only to people with higher credit scores, only loaning fractional amounts to high-risk borrowers, or both. Look at it this way: If there are 20 really sketchy borrowers on prosper.com who want $1,000 each, and I choose instead to loan $100 to 10 of them rather than $1000 to one of them, then I've spread my risk of loss out considerably. Might one (or two or more) of the 10 flake out? Yes. But each deadbeat exposes me to only a fractional loss. This is one of the things that makes prosper.com work really well for lenders, IMHO.To address m3mn0n's comment about "giving money to someone they've never seen or met online": Banks do it all the time with credit-card apps, home-equity loans and other debt instruments - propser.com gets enough info to pull a credit score and personal ID info from borrowers, which is just what a bank does with an online app.
rynoNov 27, 2006
<a class="user" href="http://www.duggmirror.com/tech_news/Social_lending_the_next_Web_2_0_phenomenon/">http://www.duggmirror.com/tech_news/Social_lending_the_next_Web_2_0_phenomenon/</a>Social lending is cool - and I can see how it would be beneficial to loan money as you're being like a small bank but - trust and security slow my ambition to jump into this... I will do more research into prosper.com however.
possfimhApr 12, 2008
The link below gets NEW lenders/ Borrower a ?30 credit. (UK folks)<a class="user" href="http://uk.zopa.com/member/PossFimh">http://uk.zopa.com/member/PossFimh</a>I won't lie I'll get a credit too but hey.... I've been lending quite happily for a while.