What is Social Lending?

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What is Social Lending

Social lending is a type of borrowing, quite different to the normal personal loans and credit cards offered by financial institutions. Although it does involve a loan, it is not monitored by a traditional financial institution. It sounds like it could be a loan from someone you know and in a sense it is similar to that.

The personal loans are usually provided through a company, but they are not a financial one. The company just acts as a mediator between the lender and the borrower. Often, the lender and the borrower might know each other and they use the peer lending company to make sure that things are sorted out properly with regards to the repayment terms. Sometimes the lender and borrower just know each other through a social networking site or in some cases they do not know each other.

Often people with a poor credit score rating might use this way for borrowing money, because the main financial institutions will not lend to them. However, as time has gone on, many companies look for less of a credit risk and so those on the credit black list are starting to be excluded from those who can borrow from this sort of company.

The attraction of social lending is usually the interest rate. It tends to be lower than that of the main financial institutions. It is often the case that the borrower gets to choose their lender and so will pick the one that has the best interest rate. For the lender they will often get a better rate of return than if they put their money in a savings account. The lender might decide to spread the risk and lend to several people rather than just one and share the loan request with others. Then if one of their personal loans does not get repaid, they have the others to cover that cost.

3 Steps to Getting the Most out of the Social Lending Experience as a Lender

You can actually get a lot done by becoming a borrower, but you can also get a lot done being a lender. For starters, you will be helping a group of people really get their personal loans taken care of in a big way, which will help you feel better in the long run. When people don’t have any other source to go to, you will be part of the group that funds their loan and helps them accomplish a goal they thought they’d never achieve.

If you’re just getting started, you might be interested in the three steps to getting the most out of the social lending experience as a lender.

First and foremost, you will want to get started with the community first. This will give you a chance to really figure out what you want to do with your time, and it will also give you plenty of time to figure out what you need to do in order to shine as a lender. Because you will be making interest off the personal loans in question, some people are very selective on whether or not they want to accept you as part of their loan. Some peer lending sites let the borrower have good control over who will ultimately fund the loan in question. On other sites where you are the sole lender, you will be the sole recipient of the lion’s share of the interest.

You can share pieces of your life that you’re comfortable with, in order for people to see that you really aren’t someone that is trying to destroy people, or make them feel small. A lot of people coming into social lending as borrowers feel like they’re going to end up being at the mercy of yet another evil lender that is going to look over their numbers and nothing else.

Social lending is better than that, and you will need to show borrowers that you believe wholeheartedly in that spirit by looking at each loan as its own unique snowflake in the winter of social lending. For example, someone might have a low credit score rating, but a high income. They’re just looking for a way to pay down their debts and improve their credit score over time. If you help them, you will not only make some interest from the money borrowed, but you will also be able to tell people that you’re truly making a difference.

Now, one step that you will need to take is to upload your own financials to the peer lending site of your choice. You don’t want to just settle for not doing this, because borrowers will want to make sure that they are actually going to get the money that you pledge to send. You can post proof of a special bank account. You don’t have to lose all of your financial privacy. In fact, most people on the site will not see the specifics — just the site administrators.

Finally, you will need to make sure that you are going over everything you submit in order to make sure it’s correct. This doesn’t just mean your initial lender application, though it helps to check over that as well. Ultimately, you get from social lending what you put into it. If you approach people the right way, they will love having you as a lender. On the other hand, if you just try to go in with a selfish attitude, you will get back nothing but fear and resentment.

Use Social Lending to Help a Developing Country

Sometimes giving to charity can be hard. You may find it difficult choosing a cause that you feel is worthy enough or you may wonder whether the money you are giving is really helping. Sometimes it can seem that the money just helps people to be helpless and not help themselves. However, there are ways to prevent that.

Social lending is a way that companies (including those in developing countries) can borrow money. If you want to help a developing country then lending money to one of them could really be the answer. You are not giving them charity because they have to pay back the money, but you are giving them a stepping stone so that they can improve their business or start a new business and provide them and their family an income.

It can be extremely satisfying to do this and at the end of the loan period you will get your money back, plus interest and you can choose to lend it to another worthy cause. Some peer lending companies will even send you information about how borrowers are getting on during the repayment term which is usually up to a year.

Not only can this solve the problem of where to invest, but it can also solve the problem of giving to charity. You will be helping someone out and you can choose the most worthy cause yourself. You will not be helping them to be helpless but encouraging them to be successful.

Imagine how satisfying that could be. You will only be helping one person but their success will help their family and will encourage others that know them to try to succeed as well. Their business may also provide vital services to the community that they live in. It is positive all round.

What’s Really Fueling the New Social Lending Revolution?

Need a loan in an uncertain economy? Chances are good that you’ve got your work cut out for you. This is because a lot of credit sources have just dried up. Due to the global recession, lenders feel that it’s better to hold onto the money that they have, rather than try to go with something that’s going to going to be riskier than what they want to take on for their own shareholders and investors.

Yet for the average person, this means that they won’t be able to get the loan that they really need. There are short term loans out there, such as payday loans, but these address only short term problems. What if you wanted a business loan? Or a loan for a car so that you could finally go back to work and give your children a better life than they have now?

There needs to be a better solution. A different solution. A solution that will focus more on people than numbers. After all, do you really only want to be known by your credit score?

Of course not.

So the best solution is here already: social lending. Yes, lending is still a factor. But there’s something special about social lending. The things that are fueling the social lending revolution are varied, and you could ask 5 people their opinions and still get 5 different answers as to what makes it so special.

Here’s our answer; it puts the power back in your hands. You aren’t going to have to go to a bank and beg, or feel two feet tall when you get rejected. You’re going to be dealing with people that know where you’re coming from.

The Internet is a powerful tool in this way — no matter what you’re looking for, you can find it if you really look for it. Does this mean that you’re going to have no trouble at all getting your loan filled? Yes and no — it’s still a mixed bag. Because it’s based on what you put into it. If you don’t make the time to sit down and be honest with the community, you won’t get your loan fully funded. If you aren’t willing to take a little higher interest rate, you won’t get your loan fully filled. If you’re not honest about what you’re making, you will not get your loan fully funded. Yes, in the Internet age, someone can definitely find out whether or not you’re lying about your information! Just don’t do it, okay?

At the end of the day, you are part of social lending in more ways than one. It’s your desire for a better life that fuels social lending. It’s your passion for helping others that fuels social lending. Above all, it’s your hope for the future that fuels social lending. Going beyond the reasons why social lending exists, you should make sure that you are fully positioned to make the most out of social lending, whether you’re a borrower or a lender.

What P2P Lending Marketplaces Remain Truly Social?

Kiva It is a non-profit organization started in 2005. It helps low-income entrepreneurs and students in developing nations by encouraging the flow of capital from developed nations. The organization has been able to reach over 1.2 million people giving them $590 million loans with a 98% repayment rate.

Zidisha It is also a non-profit company founded in 2009. It works across international borders linking lenders to borrowers. Many people turned into it because most banks have refused to increase their loan portfolios. They don’t require financial records or digital records. Borrowers defaulting have made investors to scrutinize more before taking any risk.

Babyloan is the first European microcredit website: Created in 2008, Babyloan is now the leading European solidarity loan website. It allows Internet users to lend to micro-entrepreneurs of their choice in fifteen countries, and help them to develop their own livelihood activities.

Tips for Taking Out a Personal Loan

Taking out a personal loan is a great way to provide yourself with extra money that you do not have. Many people take out personal loans because they need to do repairs on a car, buy a new vehicle, afford household renovations and even do a bit of investing. Taking out a personal loan is something that millions of people do every single day. Because of this, it can be easy to find a loan that is right for you and that is not going to cost an arm and a leg.

There are a variety of tips that you will want to utilize when applying for personal loans. For one, you need to have a clear objective for using the loan. If you are just taking out the loan for extra money or to replenish your bank account, you may be spending more long-term than the loan is worth. This is why a lot of people have a clear basis for what they are going to use the loan for and to be used for. This might be investing, the purchase of a new car or even household renovations that you might find to be helpful.

Another tip to consider when you are going to be taking out a loan is that you will want to keep the interest rate as low as possible. This is because the interest rate will either heighten or decrease the amount of money that you are spending on the loan and its repayment. You will want to talk with the loan broker before taking anything out. This prevents you from taking out a loan that is too expensive for you and is going to cost you more money in the long run. A broker will help you to choose a loan rate that is perfect for your financial needs.

You will love that taking out a loan is easy, quick and effortless. There are many types of loans to choose, making it easy for you to get one that is going to fit every one of your needs. You will also want to set up a payment plan so that the loan is paid off in a timely fashion. If you default on a lot of your loan payments, you are only going to accumulate late fees and then have financial problems down the road. This is why you need to make sure that you pay off that loan. Lots of people are putting their loans through automatic payments so that they do not forget to pay it off each month.

Now that you know how beneficial it is for you to take out a personal loan, you will find that it is easy to find one that is right for you. You will love that there are many different loans to choose and that the payments do not need to be overly expensive. Most people can easily afford loan payments and the large lump sum of taking out a loan is a great way to get hold of different problems in life. Whether it is an investment you would like to make or you need to do much-needed repairs, a loan is a great option for you.

Etiquetado en: impact investing
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Comentarios

  • Invitado
    Shaira Miércoles, 23 Octubre 2019

    When we are poor, we know that banks and financial organizations do not want to lend us money. This is even more true when one lives in a country where the banking system is failing. For those who have money and want to help the poor, there is another way to lend money, in solidarity.

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Invitado Domingo, 17 Noviembre 2019