interest

Trustbuddy – P2P Lending Service Listed at Public Stock Exchange

wiseclerk 3 Comments

I have been aware of Trustbuddy for some time. They are (at least internationally) pretty unknown since they do not do much marketing. I have only once written about them before, in order not to give publicity to a company which charges interest loans for rates in a height, that I deem could be called usury (on moral grounds not on legal grounds).
According to their own published figures on the site the current ‘Effective annual interest’ for a one year loan varies between 219% and 852% (733% to 5102% for a one month loan).
While Trustbuddy calls itself a p2p lending service, their rates are somewhat closer to Wonga (see Need a loan at 2334 percent APR).

Why do I now write about Trustbuddy then?

Well ignoring them, won’t make business models like these  disappear. And it seems to be profitable for the service as well for lenders as per the numbers that Trustbuddy supplied P2P-Banking.com.

But the main questions I ask lenders is: Do you feel it is ethical to earn the 12% p.a. interest rate given the costs the borrowers are charged? If you answer this with yes for yourself, then Trustbuddy may be a good choice for you.

Furthermore Trustbuddy is one of few companies in this business that have a drive for international expansion. Remember they bought Loanland operations earlier.

The following is information supplied by Trustbuddy:

TrustBuddy AB (2009), a Swedish P2P lending facilitation company. Using in-house developed and proprietary mobile-/web-based financing solutions, it facilitates smaller short-term loans between private consumers. The company does not lend out its own money; pooled loan-portfolio investors provide funding. TrustBuddy has already reached close to 40,000 registered members, of which more than 20,000 are active customers, in Norway and Sweden alone. This is done with virtually no marketing efforts, showing how popular the product is. Continue reading →

Need a loan at 2334 percent APR?

wiseclerk 6 Comments

No, that is not a typo in the headline. British Wonga.com offers small, short term loans online (short term= from 5 to 30 days).  The main advantage they advertise is, that the loan amount is transferred to the bank account of the borrower within minutes of the application, if approved. For that quick service Wonga charges 1% interest per day (!) plus 5.50 GBP transfer fee. According to the website that translates to an typical APR of 2334 percent.

British laws must be very liberal to allow this. In many other European countries interest rates like this would be illegal under consumer protection laws against usury. But Wonga does have a consumer credit licence from the Office of Fair Trading.

And naturally Wonga does not see itself as a loan shark. Read here, why they think their rates are appropriate. I do pity the borrowers that borrow at that interest rate.

EDIT: Interview in the Guardian with Wonga founder Errol Damelin states that Wonga had 50.000 customers during the testing phase.

EDIT Feb. 11th: See the comments for a discussion with John from Wonga.

(Photo credit: Demi-Brooke)

First anniversary of Boober

wiseclerk 2 Comments

A year ago Boober.nl launched as first peer to peer lending service in the Netherlands. While Boober faced some hardship (especially on regulation issues) the first year of Boober can be called a success for the company. So far Boober has funded over 2 million Euro in loans in the Netherlands. Compare this to the 1 million Euro Smava.de has loaned in the much larger German market in the last 10 months.

But not all lenders are satisfied with the results. The PIVN an association of lenders, on Jan. 14th called for an investment stop. The main cause are fee changes. Richard van den Toorn, Secretary of PIVN, told P2P-Banking.com:

It's not going very well with Boober, although they claim otherwise. The
PIVN (association of investors) has indeed given an advice not to invest
in new loans until some of her demands have been met. Reason for giving
such an advice is that Boober changed their payment-policy for the
investors radically, without consulting the PIVN first. It's so much the
height of their fee …, but that they are making sure the
benefits are going to Boober first, leaving the investors [lenders] with the risk of
remaining payments from the borrower. Continue reading →

Half percent more interest at Lendingclub

wiseclerk

Today for all new loans the interest rates at Lendingclub.com increase by 0.5 percent. At Lendingclub, unlike other p2p lending sites, the platform not the borrower sets the interest rate (based on credit grade). The increase was in reaction to rising borrower demand after Lendingclub eliminated state loan rate caps last week by going nationwide.

As a lender you can profit furthermore from two current promotions at Lendingclub. You get a 5% cash bonus if you lend 5,000 US$ or more by Feb. 3, 2008 (max. 20,000 per lender). Plus you get a 25 US$ signup bonus, if you sign up through this referral link.

Questions? Suggestions? Use the Lendingclub forum.