Recent reports showed that peer-to-peer lending investment grew to about $500 million in second quarter of 2009, bypassing even loan packages offered by banks and credit card companies.
Reports also told that investment through P2P has given consumers the confidence they lost during major job cuts amid recession. In the said reports, people made up to 12percent profit after investing their money in such scheme.
The P2P lending works by directing loans to borrowers through accredited firms like Lending Club.com, which in turn will sell the loans as notes. This way, it could by pass high-interest rates offered by banks and other credit institutions.
P2P users can now borrow money at the comfort of their own homes. The new scheme also offers people viable options in borrowing money for auto, home, and college bills as more and more banking systems in the US raised bar on the money it offers to the consumers.
Records from the Federal Reserve showed that some 65 percent of US banks decreased its credit limits on credit card consumers as more and more banks are experiencing difficulty on circulating money to the system. Analysts believe that this is due to the saving habit that consumers are now implying to avoid future problems amid the recession.
Economic analysts said that P2P lending is a “great opportunity” for investors to compete with major financial systems as these banks continues to rip off the people with high interests and low credit limit.
Meanwhile, other investors, who were disappointed by the current situation of the stock market, are now also looking to P2P as other way to get their money back. Most of these investors lost their money and other investments during the long months of recession.
Records showed that LendingClub.com’s loans doubled in the second quarter of 2009 to $12.5 million, from Q4 of 2008, which only reached $5.3 million.