User #55981091 wants a vacation. $10,000 should be enough to cover a couple of weeks of beach time. The problem is he doesn’t have the money.
Fortunately, there are plenty of people willing to lend it to him. Thanks to the online platform Lending Club, he already has 82 percent of the cash – from 187 different lenders.
He doesn’t know any of them and because of his high-risk credit rating, he’ll have to pay them about 20 percent interest. But that’s better than it would have been from a bank, where the vacationer probably would get no loan at all.
Welcome to the world of peer-to-peer-lending. What began as a more democratic alternative to conventional banks a few years ago now attracts millions of users, both borrowers and investors.
For individuals, it is a faster and cheaper way to borrow money. Likewise, anyone who has money lying around can be a lender and pocket yields of 5 to 8 percent on average.