Upsells and Cross-sells

Not directly related services and transactions offered or used by p2p lending services to increase revenue

Prosper refers loan applicants to other companies

wiseclerk 1 Comment

When Prosper.com went in the quiet period the company announced on its blog:

If you’re a borrower seeking a loan, you will still be able to create a new loan listing, which we will endeavor to fulfill through alternative sources.

The way this works is that Prosper refers loan applicants to other lending companies. After answering a few questions, borrowers seeking a loan a channeled to Firstagain, Lendingtree, Freedomfinancialnetwork or Creditkarma (and potentially others – the mentioned ones are the ones I was shown).

Should a borrower use the services of one of the linked companies then Prosper is paid a referral fee.

However apparently not all visitors of the site seem to be redirected. Potentially members or former users with cookies are not shown these options.

Options shown for potential borrowers

Options shown for potential borrowers

Insuring p2p lending borrowers against hazards

wiseclerk

German p2p lending service Smava.de yesterday introduced an optional insurance for borrowers. Borrowers can take out an insurance together with their loan. In the case of death, disability or unemployment (through no fault of one's own), the insurance will pay the repayments. To offer the residual debt insurance (see a definition of residual debt insurance), Smava partnered with an insurance company. The costs for the insurance paid by the borrower are:

  • death hazard only: approx. 0.5% of loan amount
  • death and disability: approx. 2.5% of loan amount
  • all three: approx 4.7% of loan amount

It will be interesting to see how many borrowers are willing to opt in to the insurance.

Lenders profit because this lowers the default risk. Unfortunately at the moment lenders can not on a borrower's loan listing whether the borrower selected insurance or not.
11 months after launch defaults at Smava are still rare. Only 3 of 368 loans have defaulted and only 2 are currently late. A chart shows the development of the Smava interest rates since start.

Duck9 – p2p lending for college students

wiseclerk

Duck9.com is positioning itself as a peer to peer lending service for college students. Lenders can invest a maximum of $10000. In the video below Duck9 founder Larry Chiang explains the business model and the benefits for lenders and borrowers.

The video is from October 2006. It might be a bit outdated. While Chiang says in the video that lenders receive a free $100 to lend, the site currently states: "NOTE: there is a SIGNIFICANT waitlist to be a lender. Money isn't accepted while you're on the waitlist".  

Zopa sells leads of borrowers with low credit grade

wiseclerk

Borrowers with unsatisfying credit seeking a loan can not use Zopa.com. Instead of just declining these applications, Zopa now sells these leads through Paaleads.com.  Brokers and financial advisors can bid to obtain these leads. (Source Mortgagesolutions-online.com)

Paaleads classifies the leads in three categories:

  • Unsecured loans – homeowners over 10.000 pounds
  • Unsecured loans – homeowners below 10.000 pounds
  • Unsecured loans – non homeowners

As the screenshots below (taken today) show, the leads are selling for prices of up to 35 pounds.

Zopa sells leads

Zopa sells leads

Zopa sells leads