Social lending is a financial mechanism which responses to individuals’ and business’ need for capital. Loans are one of most popular financial products, which is offered by banks and financial institutions. Social lending platforms give every individual possibility to earn on loans without having big capital.
How social lending works for borrower?
Social lending is one of best usages of virtual communities and social life in the internet. Everyone, including you, can lend money to people in need and gain interests from that. You need as little money as few euro or dollars to feel like a bank.
In comparison to bank loans the cost of capital is smaller, due to its division between borrower and a community of lenders. Just a small provision goes to the platform provider.
For example if someone wants to borrow 5000 EUR, he or she will have to pay about 15% yearly interest rates. At Zopa.com, one of the eldest and well-known social lending platform the interest rate will be charged at 7,9% (36 months), most of which will be given to the lenders. As an oppiste site you can earn on such platforms, borrowing let say 50 euro. If there will be 100 social loans, 50 EUR each, the loan will be given to the borrower on the fixed interest rate.
Social lending platforms
You can use many websites to get a loan from lenders’ society. Just a few of best known are:
You can read a full list of SocLen platforms on emergentbydesign.
Social lending tips for borrowers
While preparing to use social lending platforms obey social lending tips, unless you want to lose your time.
- show your cards – tell what you need your money for
- be transparent and honest – social investor are aware that it is difficult to get money back, when someones don’t want to pay back, so don’t lose their trust
- pay back as scheduled
- build the image of a great partner, you might need it in the future
If you’re interested in social lending, these sources are worth reading: