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Looking For 10% Yields? Go Online For Peer To Peer Lending
Key Excerpts from Article on Website of Forbes Magazine


Forbes Magazine, June 6, 2012
Posted: July 10th, 2012
http://www.forbes.com/sites/chrisbarth/2012/06/06/looking-fo...

Today a tidal wave of aging boomers want income, but traditional sources are lacking. But theres [a] source of high yield that relatively few consider. Peer-to-peer lending, or making personal loans via the Internet using websites like LendingClub.com and Prosper.com. After six years of experience and some bumps, including a financial crisis and ensuing recession, peer-to-peer (P2P) lending has finally earned its place on an income investors menu. The basic premise of these bank disintermediaries is that they harness the networking power of the Web to match people who have excess cash with people in need of it or those who simply want to refinance credit card debt. The key to its success has been how the sites have managed the inherent riskiness of unsecured personal loans. Believe it or not, it is now possible to earn yields of 6% or more, making relatively safe loans to complete strangers. San Franciscos Lending Club is the largest P2P lender, followed by its crosstown rival Prosper. Lending Club and Prosper have loaned a total of more than $1 billion since inception, in 112,000 loans. Lending Club currently issues about $45 million in loans a month versus Prospers $13 million per month. Of course defaults happen. Lending Clubs top-rated three-year loans expect a default rate of around 1.4%, and the riskiest loans, offering rates as high as 25%, have a 9.8% default rate.

Note: A 1.4 default rate is much lower than that of the average bank. For those who want to borrow or loan money free of the banks with excellent rates, check out www.lendingclub.com and www.prosper.com.


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