Lazy Man and Money posted the first P2P Lending Blog Carnival. I am excited that he mentioned my post on Lending Advice for New Lenders as his favorite. Despite my article being Lazy Man’s favorite, it did not make the list on the Official Prosper Blog coverage of the carnival.
My personal favorite blog posting from the Carnival was the 2007 summary of P2P lending. It is a concise summary of many recent events in the person-to-person lending marketplace.
Most borrowers are good people. It is the remaining 10% that ruins it for everyone else… it is very difficult to predict who will break or keep their promises. I now understand why credit card companies and payday loan companies charge exorbitantly high interest rates… It is to cover their default rates and the high interest rate should basically be thought of as an insurance premium rather than a profit. If there was a better way to weed out the bad borrowers, the rest of us could enjoy loans at the prime rate.
I was also glad to hear from a borrower on Prosper. She pointed out that making early payments pushes out the next due date.
Colin posted why he believes that the credit crisis has pushed peer-to-peer lending forward. He uses an article from the Economist which again quoted the 3% default rate on Prosper loans which is a gross under estimate. However, from blogging in another subject area, the Economist long ago lost its luster in my eyes, so I am not surprised that the journalist did not dig deeper into the numbers. Personally, I believe that the credit crisis is going to be a kick in the teeth for person-to-person lenders.
Other articles included: 1) Mike’s (Prosperous Land) article at the Official Prosper Blog Digging for Gold around the Portfolios and 2) the prerequisite investments to peer-to-peer lending which includes basics like an emergency fund and your work 401K.
Thanks to Lazy Man and Money for putting together the first peer-to-peer lending blog Carnival. I call it a success.