Are we seeing the beginnings of a challenge to the Banks for many types of lending/borrowing? My Son in Law is an enthuiast about an on-line site that brings borrowers and lenders together in a formal arrangement. Borrowers can get their loans at around 9% and lenders get 9% on their money. A win-win if ever I heard of one.

The idea is that someone comes on to the site and says how much they want and what for. The site run credit checks and give them a credit rating. They also answer questions from potential lenders for the five or six days that their request is on offer.

Lenders usually offer small amounts at say, 20%. However, other lenders will drive that figure down until the amount required has been reached and until the offer time has elapsed. This means that as a lender you may have lent out £20 at 14% and £10 at 8.5%.

The borrower pays the site interest monthly and it is then credited to your account with for withdrawal or further reinvestment. Amounts lent are usually quite small and risk of loss is low. The site however put bad debts into the hands of a collect agency.

There are a number of such sites around and I have just put £200 into one of them. I shall then look down the list of potential borrowers and decide who,  to to lend what, to.

Has anyone else any experience of this type of lending?

peter, i could do with £3million at 3% please?

If I had £3m I would consider lending you some but, as with these sites, I would want a lot more information before doing so. As a FWi member of course you would get my undivided attention and maybe, just maybe a slightly lower rate of interest once I had spent a free weekend on your farm and shared your hospitality.

I will now try to post this and see if I get the dreaded OOPs message. (I got it earlier on another thread and if I get it again will give up)

Isn't this exactly whata bank does, only they have people who- like it or not- are trained to spot good investments, and make a return?

Why would i be better off choosing who i lend my money to, and if i was good at spotting sound investments why wouldnt i buy shares?

I might have the wrong of the stick.. 

Interesting concept....

the beast:

Why would i be better off choosing who i lend my money to, and if i was good at spotting sound investments why wouldnt i buy shares?

'

This concept is direct lender to borrower with only a 'facilitator' not a bank in the middle. My son-in-law has a modest amount out on loan on which he is getting an average of 8.9% return compared to the 1.2% he would be getting from the bank. As to stocks and shares; if one is really good at spotting the winners then good luck to them. My own experience is that the clever city folk have usually got their money in quicker than I have and, more importantly, got it out again before the bubble buirsts.

 

Peter,

        That looks like a good way to start our Society Investing,Borrowing and Saving.I know I harp on about the subject of Banks still dealing in Derivatives nearly as much as Glasshouse with Absent Landlords. I am now willing to have Wagers with anyone up to £10 that there will be another Bank Crash within the next two years. The Business of the Banker being the in between Body of Borrower and Depositer is having its last days I fear and new organisations like these are a good way of procuring Profits,Investment and employement.

  Much to Glasshouses disgust I will let Property for my Income,Pension and a bit to leave the offspring.

Peter, Friendly Societies have fulfilled this rôle for a long time. I believe there are quite a few still in existence in the UK. The only difference I see is that the lender chooses the individual borrower, but also carries the risk of a bad choice. Through a Friendly Society, the risk is spread over all borrowers.

As the beast posted, banks and building and friendly societies have trained people to choose to whom the money should be lent, although I totally agree with you about the stock markets. Those on the spot are also trained to move more quickly than the rest of us could ever hope. 

bb, If we could agree the parameters for what would qualify as a "Bank Crash" I would be willing to take you on for a tenner. I have a Clydesdale Bank £10 note that is equally as good as a Bank of England one. Closing date for the wager would be 9th February 2013.

As I have previously said, I started my working life with the Cooperative Wholesale Society (CWS) which at the time had 454 manufacturing companies around the UK, or Britain as it was generally known in those days.  As a Methodist in a coal mining/small farming village I was also very familiar with the principles and ideals behind the mutual and friendly societies set up in Victorian times. The idea of Social Lending is not a new one, indeed it has its roots as far back as old testament times.

What is new, is the ease with which modern technology makes it possible to people who you do not know, and so there is a greater element of risk due to lack of information about the lender. This risk is however, spread around the lenders but the amount lent can be as low as £10. For the lender, he/she can therefore have say, 50 x £10 loans out at 9%. Thus spreading the risk. The site facilitators do however also conduct credit checks on those who request money, and potential lenders are able to question (on line) the people wanting the money.

As for the comment.

old mcdonald:

............. banks and building and friendly societies have trained people to choose to whom the money should be lent, ....  

Recent events which have almost bankrupted the country are, according to Gordon Brown and Ed Balls, solely the responsibility of those in the banks who have been, - and I can't resist quoting the phrase - "trained to choose to whom the money should be lent." Quite !

It seems therefore that those 'trained' are responsible for choosing to lend our money (yes, yours and my money) to people who are not going to pay it back. In addition those 'trained' people were then paid bonuses to lend our money, and now they are being paid more bonus to keep interest rates at such low rates as encourage social lending sites to spring into existence.

Hurrah, for the CWS. Hurrah for the Mutuals, Hurrah for the Social Lending sites!

PS. Of course defaults will occur but the interest paid on my deposits has factored in losses and returns around c8% from the banks and their 'trained' staff  I get c1.2%.

 

 

Peter,

       Also remember that those Banks with the so called Trained Staff went Bankrupt not the Mutuals or Social Lending Sites.

Old Mac,

            The time scale has to be two years as the Govt are going to try and extract some of the Money Lent to the Banks this year and therefore next year will be the test for these Bounders,so the Wager as I see it:

   That one of the Main Banks in this country will either go Bust,go to the Govt or Share Holders for more Money or will renage on its commitments for repayment before end of Jan 2013.

 How does that sound ! By the way I condone you and folks from years ago for paying into the Public Pension Scheme.What niggles me is that when you were a Civil Servant it was taken as normal for your Salaries not to be on the same scale as in the Commercial World,now they pay themselves figures higher than what they could ever achieve in the real world and work the system so that in their last year or two they make sure of a larger final Salary to get an even bigger final Pension.

  The whole thing is now rotten and the everyday man is paying for Bankers,Civil Servants and Politicans from a deminishing Purse.To quote a Buzz Phrase at the moment "Unsustainable".

No one really knows whats going on in the economy, it is in the bankers interest to keep it as convaluted as possible so those who are let into the secret  make some cash and dont raise to much suspicion.

 same with law, same with politics, land agents......

Maybe estate/land agents might find their club is on shaky ground with the advent of free information land registry,cheap advertising etc -buying and selling land can only be made so complicated before everyone realises they can photocopy their own legal documents, and write an advert.

Its a  big fun club... nothing like farming.... ho ho.

 

 

 

 

bb, OK we agree on the 2 years timeframe (from yesterday?) and it is restricted to the " Main Banks". Would you list them please for clarification. I agree with Go Bust (it sounds better than any other phrase) go to the govt or renége (I suspect I have not written that correctly either but we both know what we mean). I cannot agree to going to its own shareholders because that is too common a way to raise more capital and could happen without a business being in trouble. I can put up English money if you prefer it to the Clydesdale tenner.

bb , i forgive you for being a landlord.

i agree with you that big banks will go bust. not only banks, but countries.

ireland will default this year, as the people refuse to bail out the banks any more, after their election.

britain will be forced to withdraw support for RBS, LLOYDS/HBOS, etc as the property matrket plummets, and more stinking bad debts are exposed. public anger over bonuses will ensure their demise.

meanwhile food and oil will continue to rocket, leading to a crisis aka 1973. wheat £300 by november.(its £245 now for milling).

you heard it here first

Old Mac,

            Yes I will agree over the Share issue,the Banks in the Wager I think are:

  Barclays

  HSBC

  RBS/NAT WEST

  LLOYDS/HBOS

  How will we best remember our wager any thoughts?

burocrat basher:

How will we best remember our wager any thoughts?

Both of you bequest a tenner to each other in your wills. And a tenner to me for thinking of it!

Or better still go on to zopa.com and lend a tenner at 8% to someone who wants to clear his credit card.

bb, 9th Feb 2013 is £10 Day. Easy. I have made a note for 31st Dec this year in my desk diary to carry forward a note to the end of 2012, indicating the title of this thread. No doubt there are electronic gadgets that we could prgramme now to give us a reminder on the due date, but pen and paper is good enough for me.

I hope you are wrong, and not for the sake of the tenner. I would gladly give a tenner for no more bank failures. They just cause problems. Of course if FWi winds up in the meantime then we might have a slight problem in finding each other.

PW, You cannot get £10 out of us that easily. You should not have credit card debts anyway!!!

Old Mac,

           Deal done and rather like you I hope I don't win but I think the jigery pockery is still ongoing.I know an Area Manager for the Commercial Division of one these Banks and he tells me he does not see how the Bank can get out of it.I think the Profits are Paper Profits and the annual Valuations are taken on fictitious Figures from the InterBank Trading on Derivatives that are still Paper Tradings as such are untangiable assetts put on a Balance Sheet as Assetts.We will see!!

old mcdonald:

PW, You cannot get £10 out of us that easily. You should not have credit card debts anyway!!!

Old Mc. The subject of this thread is Social Lending Sites. I do not myself have any debt to anyone at all, nor have I ever had credit card debt. I have however suggested that some readers with money to lend, should consider using one of the Social Lending sites to help others clear their credit card debt and, in the process earn themselves 8 or 9% interest. The borrower also saves themselves about 8%.

As to getting a tenner out of BB and yourself, I can only dream about the conviviality of dining in a nice restaurant and sipping fine wines and a cheese board and finishing up with a selection of 25yr old malts. My favourite 25 year old is the Macallan, what is yours? 

Peter Wells:

My favourite 25 year old is the Macallan, what is yours? 

I wouldn't want to embarrass her by naming my favourite 25 year old here!

I had a little chuckle at Bovril's comment regarding his favourite 25 year old. Somehow, I reckon she will be his favourite 50 year old twenty five years hence.

As to social lending. Radio 4s Today programme had a slot about this type of lending on this mornings programme and interviewed one of the founders. He said that default was as low as 0.02%. This is better than any high street retailer's losses and about twenty times better than the banks on their ordinary loan book. Mind you, the social lenders do not have any sub-prime debtors and it is mainly these debts that are crippling the banks.

 

 

 

peter, you are right, i know of two people who live within twenty miles who have lost between them £1 billion in commercial and res property.

they are both bankrupt, but still seem to have a lifestyle, and hbos aided by hm govt carry the can.

Peter, I did not expect you to have credit card debts, and I did not intend to hijack your thread either. I do not have surplus cash to lend, but if I did I rather think I would not be participating in these social lending ideas. I would be inclined to use banks, building societies and riendly societies perhaps - if there are any of the latter two left.

As for your favourite whisky, I thought you were a Jura man from a an old thread I remembered. I bought two bottles at €17-50 each last autumn and obtained two tasting glasses with each too. I decided they were Christmas presents from my MIL so did not open them immediately. I had one and it was really good. I think I still prefer Dalmore and then Glenmorangie. They are only a few miles apart north of Inverness. I drink others too from time to time, but a bottle normally last a couple of months or more - 6 drinks to the bottle. I am a bit of a skinflint when it comes to prices, (I have wines with dinner every night and think of the vast quantity of good table wines, Setúbal, Madeira, Lajido - the Azorean wine from the island of Pico, and of course Port for the same money) so settle for 10 or 12 yo as a rule, although my boy bought me a 15yo Dalmore last year, and it was better.

 

old mcdonald:

As for your favourite whisky, I thought you were a Jura man from a an old thread

I do like Jura, along with just about every other malt you can mention. However, I have not as yet had a 25 year old Jura and so the Maccallan was mentioned. I am however totally open minded on this issue and will happily try any malt you wish to mention. (or provide)

Do you think it possible, that when we reach the pearly gates that St, Peter will make his decision on entry based on our answer to the question, "What is your favourite malt?" My answer will be to ask if I can try them all first.

 

 

 

Peter, I do not think I ever had a 25yo malt. My whisky budget does not stretch to their prices. I drink little of it now anyway, although obviously it was the "local drink" when on the Black Isle, and I tried many. I do not care for any of the Speysides in their 10 & 12 yo modes. Now I drink almost exclusively table and fortified wines.

I think you already know I do not believe in St Peter or Heaven, but my hypothetical answer at this stage would be Dalmore. I too have an open mind and I would enjoy a tasting session with you. I will need more than bb's £10 though.

 so back to the borrower gets a loan at 9% compared to 16% at the bank, and the lender receives 9%........ how does the site make their money?

 

Lynton:

how does the site make their money?

The site Zopa.com make their money from a fee from the borrower and a 1% charge on the lender. At least that is what they say on the site. I do not know how other sites make theirs, but I expect that once established - and zopa has been going for around five years - they will attract advertising.