The basic concept as described in the book was what I thought everyone on the net already knew. But, sometimes I think everyone knows, just because I do. That of course isn't always true. P2P is a simple concept. If you are a lender, you choose borrowers who you want to help. There is no bank involved, it is just simply people lending to other people. Say someone wants to borrow $1,000. One person can bid (in a sort of auction format) to loan them the money or 20 people can put in $50 each to the loan the person the $1,000. The site that you use, acts as the transfer agent (and help keeps everyone's names private). The site also acts as the collection agent, if that become necessary.
I mentioned bid, because each of the lenders say how much they are willing to loan to an individual and at what interest rate(depending on the particular borrowers published credit rank). The lower collective interest rates will be the borrowers interest rate, while the winning lender(s) receive interest on the amount they loaned.
There is some differences, between each of the p2p players. To many in fact to to list here, besides it would be a disservice to the books authors, if I spelled it out for you. Instead, I will list the various players (according to the book) and recommend that you buy the book )or borrow it from your local library).
- Prosper.com is probably the best known of all the players.
- Kiva.org's mission is to connect people through lending for the sake of alleviating poverty. However lenders don't earn interest on their money, so this is totally lending from your heart. Kiva.org is also a 501c3 non-profit.
- Fynanz.com has a deferred payment option, which requires a monthly $25 "good faith" payment. Another option is the interest only option, while you are in school. Either way the interest may be deductible as it is an educational expense.
- GreenNote.com also specializes in student loans.
Before reading this book, I had no idea there was so many players in the P2P market. In fact, the above 9 aren't all of them. There are 2 more players that are geared to student loans. Although some of the above websites also have student loan offerings, but loan payments start immediately.
Over all, I found the book to be very informative and have no problem recommending my readers to read this book also. It will be a valuable reference book in my financial library. One that I will be sure to use as I move closer to investing some of my money through such p2p lending.
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