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Micro Loans, Peer-to-Peer Lending

 
Chandra Bhatt
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Dear All,

How successful as reliable these Micro Loans, Peer-to-peer lending systems
are?
I was looking into DhanaX.

Please give your comments on pro and con sides of these kind of
peer-to-peer fund lending system. Wouldn't it be better to stick to
traditional banking systems rather than looking into these sort of things.

I see them as new and fascinating concept spreading gradually.

 
Henry Wong
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Well, they are definitely interesting. I had a few friends that tried it. You definitely get better interest rates -- in fact, you get to bid what interest rate you want for your money...

Of course, people who borrow from these places, are people who probably can't get loans from traditional banks... so there are risks.


Overall, some made money, a couple made some "bad loans"... but they were all just playing around anyway -- meaning not putting much money into it. To me, it felt like they were doing online gambling.

Henry
 
Pat Farrell
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Originally posted by Chandra Bhatt:
How successful as reliable these Micro Loans, Peer-to-peer lending systems are?


I don't know enough about that specific site to comment on it, but the concept won a Nobel prize in Economics, and its had big impact on society where its been tried.

peer-to-peer lending is all that there was before banks. And today's Credit Unions are pure peer-to-peer. They are just scaled a bit higher, typically used for car loans, where micro-loans are typicaly used to buy a sewing machine.
 
Chandra Bhatt
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Thanks Henry/Pat!

How much risk factor does this cover? What should be the investment strategy
if you don't want to put yourself much at risk?
 
Pat Farrell
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I think its too risky if you are not there, with the folks getting the loans. Then again, the typical loan is tiny, so if you lose it all, you aren't likely to starve. The folks getting the loans are already close to starving, which is why the normal banks won't lend to them.

But as I said, I don't know anything about the specific, so I can't comment on that. If I knew some woman who wanted a loan for a sewing machine, I'd probably do the loan.
 
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