People-to-people Lending

People-To-People Lending

Introduction.
Most people like to help someone else, which is the whole idea behind people-to-people lending. People-to-People lending isn’t anything new; in many respects the credit unions of the past worked on a similar principle and people have been lending money to each ever since we stopped bartering for things. People-to-people lending is that it doesn’t involve a bank. When a bank lends someone money it’s a fairly impersonal transaction. All the bank is concerned about is making a profit on its loan. In a person-to-person loan there is a personal connection between the lender and the borrower. You may ask if there are any risks in people-to-people lending and of there are. For this reason, you should only participate in people-to-people lending through an established and reputable organization.
People-to-People Lending – a history lesson.
In the past people-to-people lending would be one person lending money to a friend or family member. These people-to-people lending arrangements would rarely involve interest and may well have had a generou period in which the money could be paid back. For larger amounts of money credit unions could often help out. Today, Web 2.0 technology using social websites means that anyone can become a person-to-person lender of money. All you need is to find one of the websites specializing in people-to-people lending, register with them and then look for projects that you’d like to lend money to or borrow money from.
People-to-People Lending - how it works on the internet.
People thinking about becoming involved in people-to-people lending will want to know how it works first. Let’s take an example. Imagine I’m studying at California State University Northridge; and I want to set up a support service for deaf students coming to CSUN. I’ve got a business model and support from CSUN, but need some funding to kick-start it. Going to a bank or a finance company would cost too much in interest so I’m looking for a loan at a low rate of interest for my socially valid project. Ideally, what I’m looking for here is someone willing to lend me money for altruistic purposes, and wanting to make a profit for themselves. A Web 2.0 social lending club is just the thing. I can look through all the people in the social lending club willing to lend money to worthwhile projects. Having identified someone that I think will be interested in a people-to-people lending arrangement all I have to do is contact them through the social lending club on the internet and arrange to borrow the money and fix terms.

Play fair when borrowing through a person-to-person loan.
There will undoubtedly be unscrupulous folks out there that will think people-to-people lending is an easy way to get some money. First, your credit history will be checked by the social lending clubs you'register with. Second the whole premise of person-to-person lending works to a large degree on trust. You should see any loan made to you by a social lender almost as if it came from a friend or relation. Who you wouldn’t want to cheat!