An army of… lenders? Read:
Schilling discovered Lending Club.com, an Internet- based firm that works much like a community bank where investors lend money to people who need it.
The business is one of a handful of online groups known as “peer-to-peer” lenders — P2P in industry jargon — where individuals decide to whom they will make personal loans, most of them unsecured. The growing sector last year accounted for $647 million in loans, and some analysts predict it will approach $5.8 billion by 2010.
“I didn’t know what it was, with people collaborating on loan money,” Schilling said. “It was pretty incredible.”
More important, his note was affordable: $5,000 for three years at 10.78 percent. The interest was determined on factors such as his credit score and work history.
I’m mostly cashed out of the stock market, and not ready to buy back in (although Apple shares are looking might tasty right now). And there’s a credit crunch going on you might have heard a thing or two about on the news.
Peer-to-peer lending might be a fairly safe way for investors to get a decent return. It also looks like one way for consumers to bypass traditional lenders — who are too spooked these days to move on anything less than a 740 credit score.
(Hat tip, Ed Lambert.)