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Old 02-15-2013, 09:45 AM
 
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Is peer to peer lending profitable?

Could you make a small business out of doing it? What if you only lent at under $5,000 each time?
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Old 02-15-2013, 10:32 AM
 
Location: NJ
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i actually got a little thing in my valpak coupon packet that had one side investors looking to lend, the other side was for people looking to borrow. i think it said something about a 15% return. it just seems too risky to me.
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Old 02-15-2013, 11:09 AM
 
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Becoming a loan shark, aye? Well, shark you'll have to be. Seriously. You will have to have rock solid contracts signed, and, preferably, collateral. Then, you'll have to report profit to IRS anyway. It's a whole lotta headache for few bucks you make. I have done twice 10 and 6K for 10% for 6 months. But the guy grew on me, so I know him real well. Otherwise, dealing with strangers or acquaintances, I wouldn't risk.
Then again, there's a billionair somewhere in Asia, that started with giving very low amounts loans for neighbors and such. Owns a financial empire now.
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Old 02-15-2013, 04:22 PM
 
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Are there not websites or middlemen to facilitate such a relationship. I understand there is risk, but what venture does not entail this?

10% and 15% returns? That is a lot isnt it. I dont think banks charge that much.

Yes, I guess I would be a loan shark. I have always been in organized crime buff. It is just that banks makes their money like this, and they have lots of money. So I ask, why not imitate them as best as you can?
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Old 02-15-2013, 05:44 PM
 
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Quote:
Originally Posted by NJ Brazen_3133 View Post
Are there not websites or middlemen to facilitate such a relationship. I understand there is risk, but what venture does not entail this?

10% and 15% returns? That is a lot isnt it. I dont think banks charge that much.

Yes, I guess I would be a loan shark. I have always been in organized crime buff. It is just that banks makes their money like this, and they have lots of money. So I ask, why not imitate them as best as you can?
Lending on businesses with so much risk that they have to accept such high interest rates you are better off buying stocks or equity in startup companies.
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Old 02-15-2013, 06:25 PM
 
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Originally Posted by jdm2008 View Post
Lending on businesses with so much risk that they have to accept such high interest rates you are better off buying stocks or equity in startup companies.
So most of these peer to peer loans is for small businesses? How much are these peer to peer loans? On the web I have seen from under $10,000 to close to $100,000. But would not a small business go to a bank to get money?
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Old 02-16-2013, 02:32 AM
 
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Quote:
Originally Posted by NJ Brazen_3133 View Post
So most of these peer to peer loans is for small businesses? How much are these peer to peer loans? On the web I have seen from under $10,000 to close to $100,000. But would not a small business go to a bank to get money?
Probably because the small business can't find a bank to lend them the money they need.
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Old 02-18-2013, 04:29 AM
 
Location: Florida
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Prosper.com is a good website for peer to peer loans. The borrowers apply for a certain dollar amount and loan duration while being assigned a risk level and APR by the website. There are A-rated people requesting $5k at 11%, D-rated people asking for $25k at 25%, and everything in between. The house charges 1% along with some other fees to the borrower. Lenders can spread their money across the board in as small as $50 minimum increments. You can watch as the loan slowly becomes fulfilled. If it doesn't have enough investors by a certain point it gets cancelled. Once 100% vested, the site automatically withdraws the funds from the borrowers checking account and pays the lenders monthly.

Like anything else, there is a small default rate so it's recommended that lenders spread their money around. Loan requests are listed under categories like debt consolidation, home improvement, business, etc and can also type out a relatively short pitch. Not all do though which is a red flag to me. Another red flag is when someone wants the max amount of $25k for debt consolidation at a high interest rate of 25% or more. The most their credit cards could be charging them is 29.99% so this is not a safe bet. If you're going to invest in someone at that high of a rate let it be someone asking for a much smaller amount for more believable reasons (braces for the kid, final semester of college, etc).

If you click on the loan requests you'll see that the lenders fulfill it in very small increments. You'll also notice that some users seem to be invested in dozens of different loans. Again, this is the way to go, spreading $50 bills all over at different interest rates instead of trying to pick the one 15% loan that won't default.


(By the way I have nothing to do with this company other than having considered both borrowing and lending though it. I've yet to do either).
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Old 02-19-2013, 11:24 PM
 
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Do you know anyone who has used that website?
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Old 02-19-2013, 11:45 PM
 
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Quote:
Originally Posted by NJ Brazen_3133 View Post
Is peer to peer lending profitable?

Could you make a small business out of doing it? What if you only lent at under $5,000 each time?
Personal Loans & Investing with Peer Lending - Lending Club
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