Traditionally Australians have relied on their bank or credit union to obtain a personal loan, however now credit card financing is becoming very common (particularly at Christmas time consumer are now financing their spending habits through the use of plastic). As Australians have embraced debt now to finance their way of life (we generated $80 billion in personal loans last year according to the ABS) this has resulted in an income bonanza for the banks and financial institutions that charge a combination of high interest rates and setup and ongoing fees.
Have you ever tried to get a personal loan? It’s an easy process if you are a AAA credit history applicant with loads of income but what about just ordinary people struggling with rising inflation, high petrol prices and ever increasing cost of property. In steps a new kind of financial intermediary, the Social Lending platform that creates person to person (P2P) loans. Ordinary people can essentially now borrow and lend online to other people by just following one of two quick processes:
- If you’re a borrower – complete the application form to get your credit grade and enter in the amount of money you need and most importantly the maximum interest rate you want to pay
- If you’re a lender – complete an application to setup your lending account and then browse loan listings. Choose the type of borrower and credit profile you are willing to lend against and then transfer funds to the Social Lending platform (the site will manage loan settlement on your behalf)
Sounds simple? Because it is…The site manages most of the settlement, legal and back end functions to make this service very simple for the consumer.
If you’re interested in either getting a community loan from people in