September 5th, 2009
There are now nineteen live listings on WikiLoan.com. Not surprisingly, none of the listings have been issued funds from a lender. The borrowers are asking for outrages interest rates based on their credit ratings. There are borrowers asking for 4% interest rates for their unsecured loans! Most of the listings have F ratings (scores between 0-599) and are asking for rates under 10%.
I can’t blame the lenders for avoiding this site for now. WikiLoan should advise their borrowers of reasonable rates based on their credit scores. LendingClub sets the rates, and prosper shows lenders how likely their loan will be funded for a range of rates.
November 23rd, 2008
Well it seems I may have opened my mouth a little too soon. During a post on 10/30/2008 I reviewed the borrowing process at LendingClub.com. One of the pros I mentioned was “The loan has never shown up on Experian ( it has been over a year) . This is great for people wanting to consolidate debt. Your credit score rises as you use the loan to pay off credit cards and your debt to income percent falls.”
As of today, a year and one month after I recieved a loan from lendingclub.com, they have finally reported to experian. The loan is categorized as an installment debt with fixed payments which is not a bad hit on the credit score. In fact, after the loan was reported, my score did not budge.
LendingClub.com did report immediately to transunion and equifax. Until today, it had seemed that experian was forgotten. This news should not stop you from consolidating debt with a peer lending site. If you can receive a loan at a lower interest rate with fixed payments while paying off unsecured revolving debt, your credit score should still rise.
E.M.
November 20th, 2008
After receiving word on Fynanz.com, I decided to see what all the buzz is about. Fynanz.com is a peer 2 peer lending site providing private student loans.
The funded loans are sent to the student by check payable to both the student and the schools which they attend. This means the students will have to bring the check to their school which the school deposits.
The students are rated using a FACS score which Fynanz claims is based on credit profiles of cosigner and student (if available), GPA, year in school, school attending and course of study. They also claim that credit scores under 640 will not be funded.
The site itself is streamline and easy to use. The sign up process was simple, fast and secure. Funds are transferred via a checking account which was a breeze to setup and verify. The verification process took three days.
Also, Fynanz offers an initial $500 of “lending power” which allows you to bid on loans prior to having funds in your account. The catch is that you must deposit funds into your account matching the initial bid prior to five days before the close of the loan. This gives new lending accounts a way to bid prior to account verification and also allows lenders to keep unused funds out of their account which is not earning interest.
The accounts are guaranteed based on the students FACS score. The loans can be guaranteed up to 100%. The loans I looked at ranged from 70% to 90% guarantee. This means that if the student defaults on the loan, Fynanz.com will repay up to 100% of the loan back to the lender. They claim they can do this based on a 1% lenders fee they charge that is deposited into the guarantee fund.
The students have the option to borrow with deferred payments or interest paid. If interest paid, lenders will see regular monthly payments with interest. If deferred, the lender will see an immediate $25/ month good faith payment and then regular payments sixth months after graduation.
Here are a few problems I noticed:
1 – No borrowers!! In fact as of 11/19/2008 there is a total of SIX borrowers.
2 – These are long term loans – there is no sale of the note for the initial year and only a possibility of option to sell the note later.. but no promise according to Fynanz.com
3 – With so little borrowers I do not see the “guaranteed fund” to be fully capable of repaying defaulted loans.
4 – There are many states that Fynanz.com is not currently licensed with.. they claim they will be adding more with time. Here’s a link to the states they are currently able to do business with – http://www.fynanz.com/help/state_licenses
5 – Low interest rates to lenders compared to other P2P lending sites.
6 – High interest rates for borrowers compared to other student loan options. Fynanz.com warns borrowers that government loans are more beneficial. “Borrowers: Before considering an OpenLoan, please exhaust federal loans, which in most cases will cost less.”
Pros noticed:
1. Easy to use website
2. Fast application process
3. A great idea allowing lenders to invest in a students future (kind of a good feeling)
4. Initial “Lending Power” a great way to speed up the lending process
5. A feeling of security knowing the students must bring the loan to their schools to be fully utilized
6. No minimum initial deposit
7. Guarantees for the lenders (if this holds up)
Overall Fynanz.com is a fun new idea which has a lot of potential. It is relatively new and needs more borrowers. If it can get licensed in more states the growth of the site should speed up. With more time this site will be a great innovation for student loans.
October 30th, 2008
I havn’t fully used the tools available through lendingclub.com. However, I did go through the process of acquiring a loan.
The Pluses:
- The application process was a breeze.
- Direct deposit into checking and direct withdrawal of payments from same account.
- Interest rate was very good compared to other unsecured loans.
- The funding process was fast, easy and efficient.
- Privacy was very good and kept your face and information away from the internet world.
- Only lending users can view your profile!
- They set your interest rate – can be positive and negative. The positive side is that borrowers aren’t being stupid and asking for loans at 30% or higher as seen on other peer lending sites.
- The loan has never shown up on Experian ( it has been over a year) . This is great for people wanting to consolidate debt. Your credit score rises as you use the loan to pay off credit cards and your debt to income percent falls.
The downers
- Can’t set your own interest rate. Like above, this is a good thing for people desperate for money and asking for unreasonable interest rates. However, in other peer lending sites if you can plead a good case and show that you are a responsible borrower, lower rates are possible.
- Must be registered as a borrower or lender. This is a pain for when I try to do reviews for both the lending and borrowing side. I will have to resubmit a new application under a different email in order to become a lender. Many users of p2p lending sites borrow loans at very low rates and re-invest them to other members to make a profit. LendingClub’s registration process will make re-investing borrowed loans a tad trickier.
LendinClub.com has passed my test with flying colors for the borrowing aspect of their site. Later, I’ll post a review on how I feel about the investing portion.
E.M.
