Financing on the lloyds of London model

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  1. jimnagrom

    jimnagrom New Member

    Financing on the lloyds of London model

    Feb 23rd Economist article Person-to-person finance

    Borrowing and lending get personal

    "THE internet age was supposed to herald hard times for the middleman.
    Customers, so it was said, would flock to the web to buy products and
    services faster, cheaper and more transparently than in shops or through
    intermediaries. Disintermediation has indeed come about, as any out-of-work
    travel agent or bookseller will tell you. Yet retail bankers-the middlemen
    between savers and borrowers-have been surprisingly untouched.
    Enter Prosper Marketplace, a Californian company that matches people who
    need small loans with others who have extra cash to lend. Prosper launched
    its website on February 6th. This week, the number of active bids for loans
    was running at around 200. Lenders have put up some $750,000."
    "Borrowers, who first undergo identity and credit checks, post bids
    specifying how much they wish to borrow and the highest interest rate they
    are willing to pay. Lenders bid the lowest rate they will accept for a given
    credit profile (based on credit scores, debt-to-income ratios and other
    metrics) and period. To diversify risk, most loans are made on a
    "one-to-many" basis, meaning a lender's loan of, say, $5,000 would be spread
    across lots of borrowers. Zopa's lenders' money is strewn among at least 50
    borrowers; Prosper's members can take on entire loans if they like."
     

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