This mortgage meltdown the country is going through right now is a nightmare for many. Thousands of people are losing their homes through foreclosure due to bad loans issued from sub prime lender Country Wide. It gets a bit more complicated than just that but you get the point, this country and the ability for others to borrow money has been widely reduced.
If you were fortunate enough to survive the mortgage meltdown don’t be fooled to think that you aren’t affected. We are all affected. Even though you hung on and still have your good to great credit rating in tact, banks lending opportunities have been severely diminished. This occurs when banks write too many bad loans. When too many bad loans are created it reduces the banks ability to borrow money from the federal government and in turn the bank has no money to give you regardless of your credit rating.
Lucky for you and many others out there the Internet has made it possible to still borrow money through peer to peer lending. If you have a good to great credit rating you are in luck, because everyday people are looking for ways to invest their money outside of real estate and the stock market, and would rather do it by lending money to people like you who have great credit.
Person to person lending or peer lending as it is often referred to is the practice of others lending you money at an interest rate based on your credit rating. This allows you to borrow the money you need to do whatever it is you are going to do with it, and the people lending you the money will receive a nice return.
So how big is peer lending? Big enough that Sir Richard Branson (CEO of Virgin Inc.) purchased the website CircleLending, and his competitors range from Zopa, to Prosper, to LendingClub. These websites allow lenders, normally everyday people like you and me, to invest their money by financing loans requested from borrowers who are also everyday people like you and me.
If you want to be a lender you can start with as little as $50 on many of the sites I previously mentioned. These sites are claiming returns for investors from anywhere from %7 to %15 and some say even higher, although they are the riskier loans.
If you want to be a borrower you can borrow as little as $1000 on most sites up to $25,000, however the amount you borrow and the interest rate that you receive may also depend on the state you live in. For example in Pennsylvania a peer lending site can not charge you more than %7 interest on your loan. As a borrower that is good for you, however it is also bad if you are trying to borrow $25,000, as chances are most lenders won’t take that much of a risk on such a small return.
These peer lending sites are a great way for borrowers to obtain capital to start a business or even down payment and closing cost money for an investment property. They are also great for lenders to earn a return on their money with minimal risk.
If you fall into either the borrower or lender category you might want to check out a couple of these websites to see if they are right for you. They may just be the opportunity you were looking for.