Peer-to-Peer Lending

As the global credit squeeze leads banks to tighten their lending, a niche industry is emerging. The eBay of consumer loans, peer-to-peer lenders.

Default rates are lower for peer-to-peer loans than for other consumer loans. Typical loan amounts range from $8,000 to $20,000, mutiple lenders may fund a loan, each offering to lend $25 to $200 to a borrower. Rates average 10-16%. Lenders usually decide whether to lend money to a particular borrower - and at what rate - based on the borrower's credit score and existing debt. The decision is sometimes based on social factors as well.

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The popularity of such loans is skyrocketing!! 2005 saw $100 million in loans, 2006 that amount tripled, 2007 is estimated to have doubled that of 2006. The estimates call for further expansion, a 130% increase in 2008 followed by 100% increases in both 2009 and 2010. This will soon be on every available street corner in America.