Can Peer-To-Peer Finance Work? 261
Dotnaught writes "Two companies, Prosper and Zopa, appear to be convinced that social networking can be combined with borrowing and lending. They're intent on using eBay as a model for listing and bidding on loans without the involvement of a bank. Call it peer-to-peer finance. There are already some 800 groups on Prosper ready to loan money to specific causes, such as the Apple User Group, 'a lending group for those wishing to purchase either a Macintosh or Apple iPod.'"
If only you can book those loans as revenue... (Score:5, Funny)
I for one,, (Score:0, Funny)
Re:I wouldn't want (Score:5, Funny)
Imagine if you can log on to BeatTorrent, hook up with a few peers living near your debtor, and get them to show your debtor some muscles.
Re:Existing Finance (Score:3, Funny)
Yay, venture capitalists!
First of all, how many bad debts can these peers handle? Large corporations have enough cash to handle bad or delayed debts.
They are trying to spread risks around. They also are assuming a 4% default rate. I don't know if that is a feasible goal, but they are claiming that the "community" they are building, combined with off-line credit inquiries, will get them to that number.
Unlike other successful P2P services, this model is entering a market where existing businesses are making a living out of it.
In theory, they could take away a lot of bureaucracry, and do it cheaper. In practice, it looks like they are attracting crazy investors, who don't trust banks. (I suppose this is better than putting money under the mattress?) Here's a fun quote from the article:
Hey, if you can find the people who prefer more risk for less return, why not take advantage of them?
Re:Existing Finance (Score:2, Funny)
It's a great idea! (Score:3, Funny)
I have personally invested a hefty sum in a Nigerian financial institution run by the daughter of the country's former minister of finance. She contacted me personally (what banks can match that kind of personalized service?) and personally arranged for my account. I sent her my retirement savings and she will soon start sending me my massive returns. I will soon be rolling in obsene amounts of money!
Nigeria is the future of finance I tell you!
Re:Existing Finance (Score:2, Funny)
You lost me there.
new fraud model? (Score:1, Funny)