Communitylend has partnered with Canada’s largest used car site AutoTrader.ca, now offering a car financing option through Communitylend for every listed car.
The option is limited to private listings in Ontario for cars with a sales price of up to 25,000 CAN$.
This is a good partnership for Communitylend as it will profit from increased exposure to potential borrowers.
(Source)
Related Article: P2P Lending With Cars as Collateral
P2P lending services are young and developing in an innovative environment with little established best practise examples. Every company is constantly trying to learn how to improve the experience for its users. Whether it be user interface, information pages, business model and fees – there is lots of room for incremental improvements.
P2p lending services certainly test run some things before the general public gets to use them. Examples of methods to do this are closed betas, monitored usability tests, A/B tests, ….
One of the most valuable sources of information & ideas for improvements are the users themselves. The mass of users ensures that every little step of every process gets used possible times, bugs identified and misinterpretable information questioned.
Here is a set of methods that p2p lending companies can use to collect and profit from the wealth of user experiences.
Yesterday I attended the first ‘lender conference’ of Smava in Berlin. I put ‘lender conference’ in quotation marks because that term sounds a little magniloquent and misleading for the type of event it actually was. More fitting would be a discussion with a panel of selected experienced lenders. Smava handpicked 5 of those and invited them to Berlin reimbursing travel expenses. After a short tour of the premises, processes, lender wishes and market situation were discussed in depth (see longer report at P2P-Kredite.com). The small number of participants enabled an extremly useful discussion.
Smava in the time from September, 15th 2010 to October, 15th 2010 offered subsidized loans to new customers (borrowers). The offer was limited to loan amounts up to 2,500 Euro and only available for 36 months loan terms.
Eligible borrowers could take out a loan at an APR of 2.99%. Since lenders received “normal” rates (typically between 5 and 13% nominal depending on credit grades) Smava subsidizes the difference. Over the duration of 36 months this will cost Smava about 150 to 300 Euro per loan.
According to Wiseclerk stats about 150 loans with a total volume of 350,000 Euro closed at the reduced rate.
Reasons for this marketing promo
Smava did not comment about the motives behind this offer. While the resulting CPO of this offer is higher then with other marketing channels, Smava could have speculated that the press picks the special offer and that the traffic from the generated press coverage leads to additional loan requests that are not eligible for the offer. Furthermore the rate of 2.99% APR could place Smava prominently ranked on loan price comparison sites.
Results
In my opinion this offer had low success. Judging by economic facts it might be considered a failure. Little additional press coverage was generated by this special offer. The total loan volume funded per month did not rise compared to previous months. The offer might aid the positive image of the Smava brand though.
This is a guest post by Tuomas Talola, CEO of coming Finnish P2P lending site Lainaaja and blogger at Cloudfunder.
Peer-to-peer lending has been growing rapidly since the inception in 2005. Lending amounts are small compared to traditional banks, but potential is immense. What would it take to really break into mainstream and become a potential option to large customer masses?
What Is the Chasm and Target Customers?
Geoffrey A. Moore wrote a highly appraised book called Crossing the Chasm in 1991. The book was about high-tech products marketing during the early stages and the difficulties of reaching majority of customers. In this post I’ll take a look what can be learned from the insights of the book and how to apply it to P2P lending.
Crossing the Chasm - Source:Wikpedia
According to Moore, there is a chasm between early adopters (technology enthusiasts and visionaries) and the early majority (pragmatists). Visionaries and pragmatists have very different expectations and this might be the reason why many technology products fail. Selling to the Early Adopters is easier, they are people who are always looking the new revolutionary technologies. As a group, they are easy to sell but very hard to please. Continue reading
Canadian p2p lending service CommunityLend announces:
MorWEB partners with CommunityLend Inc. to provide direct access to
unsecured lending options for the Canadian Mortgage Broker market
Marlborough Stirling Canada (MSC) is pleased to announce that direct access to CommunityLend, Canada’s only online Peer-to-Peer lending service, will now be available to the broker market using MorWEB.
MorWEB brokers will now be able to seamlessly refer clients directly to CommunityLend to arrange unsecured loans from private investors. This will provide another value added service to customers of mortgage brokers using MorWEB. Phase one of this novel integration is now available on the MorWEB platform with a more comprehensive integration scheduled for later this year.
CommunityLend, …, launched earlier this year and is exploring a number of different marketing options to spread the word about its services and to recruit good quality borrowers looking for more competitive rates for small unsecured loans.
â€We are excited by the opportunity to work with one of Canada’s leading software providers to the Mortgage industry,†noted Michael Garrity, CEO of CommunityLend. “We understand the important role of Mortgage Brokers in helping their clients to find the best rates on loans to meet their needs. …â€
Since CommunityLend is restricted to accredited investors* by regulation, this marketing move uses an existing multiplier to reach potential lenders. It continues the earlier reported trend of existing financial institutions partnering with new p2p lending players.
(Source: CommunityLend blog)
*corrected – an earlier version of the article wrongly stated “institutional lenders” – see comment below
I just watched the recorded webcast. It’s great that Lending Club uses these to communicate to the users. However I found the way some information were presented to the lenders to be controversial. About 11 minutes into the presentation the company advertises the Annualized Default Rate of 2.36%. Looking at the slide at 0:13:29 the company states “Less than Three Loans out of the 100 Default”. Is that right – does the percentage of Annualized Default Rate figure match the percentage of loans that default?
This does not match Lendingclub’s own definition of Annualized Default Rate, which is:
Annualized Default Rate is calculated by dividing the total amount of loans in default by the total amount of loans issued for more than 120 days, divided by the number of months loans in default have been outstanding and multiplied by twelve. The loans issued for less than 120 days are excluded from the calculation because loans are unlikely to default during the first 120 days.
I’ll create the following example to illustrate what Annualized Default Rate means to lenders. Imagine a bad-lucked lender that loaned 10 loans with 100 US$ each 12 months ago. First all went well, but after 10 months suddenly 5 of his borrowers failed to pay and defaulted. Colloquially that lender might swear: “That sucks, 50% of my loans defaulted”
Under the formula this gives us an annualized default rate of 8.3%. That sounds much better, doesn’t it? The important difference is that the annualized default rate figure is just a snapshot taken right now. It will rise over the time until the loans mature (if the lender does not invest in new loans). So after 36 months it will be much higher while the figure “50% of my loans defaulted” will not have changed after 36 months (if the other 5 loans continue to be paid on time).
You may want to ask, if the figure could fall instead of rise? No, for a given portfolio the annualized default rate can only go up over time – no loan can return form a default but addituionally further loans could default.
So what does that mean?
First: An annualized default rate of 2,36% does not match the message “Less than Three Loans out of the 100 Default”.
Second: Most of Lending Club’s loans are very young and the overall loan volume is growing. So even if – due to growth – the annualized default rate stays at 2,36% overall, it will rise higher for given loan portfolios orginated in the past. (Compare: ‘Lending Club Default Rates Much Higher than Initially Expected?‘).
Note that the same effects impact the Net Annualized Return rate.