Services

Zopa UK reshapes markets

wiseclerk

Zopa UK has announced that it will remove the options to lend for 12, 24 or 48 months and concentrate on lending terms of 36 and 60 months. The changes apply only to money lend through Zopa markets not to Zopa listings.

Why are we making these changes?
– Since Zopa began more than three years ago, more than 95% of your loans have been taken for a period of 3 years or less.
– The popularity of larger loans repaid over 5 years is increasing, particularly since we introduced the new fixed borrower fee.
– Almost half of our new lenders who sign up to Zopa do not become active and our hypothesis is that it is just too time consuming for them to make offers to all of our markets.
– This allows us to simplify the marketplace considerably, while still allowing borrowers to repay their loan early with no penalty.
– Because listings still enables all loan terms from 1 to 5 years, Zopa will continue to offer a wide variety of borrowing and lending options.
– By structuring repayments over at least 36 months, we aim to encourage fewer borrowers to repay their loan early, maximising the interest you earn from each loan and reducing the period your money might spend in your holding account. This is because the loans that have been repaid early to date were mostly taken for 12 and 24 months in the first instance, so that borrowers had paid back a good proportion of their loan after just a few months.
– We’re not envisaging that there will be any significant financial impact for Zopa from these changes. At most, we would earn 0.5% of the outstanding capital for a little longer if we can dissuade early repayment, but since we would hope that lenders would relend any funds repaid early anyway, we’re unlikely to earn anything more significant. These changes are purely aimed at simplifying our offer.

Lender reactions in the forums (19 pages of comments) are mostly negative.
Some lenders speculate that this move is a necessary result of the new flat fee which was introduced earlier. Borrowers pay 94.25 GBP of the loan amount. For short term loans the impact of this fee on the APR is higher then for long term loans. 

Big news – Prosper goes national with 36 percent max interest rate

wiseclerk 2 Comments

Announced today Prosper.com has achieved nationwide lending (exceptions South Dakota and Texas) with an interest rate maximum of 36 percent. Previously maximum interest rates varied on a state by state basis depending by the licenses Prosper had acquired.

Prosper chose the same construct to go national as did Lendingclub in December – both partnered with WebBank, Utah.

All loans originated through the Prosper marketplace are made by WebBank, a Utah-chartered Industrial Bank. Prosper provides services to WebBank in connection with the origination of such loans and Prosper services loans made to Prosper borrowers on behalf of registered Prosper lenders who purchase such loans.

This step has good potential to multiply the monthly loan volume originated by Prosper, as chances for obtaining a loan were in the past harmed in some states by low state interest rate caps (especially for lower credit grades).

Cashare launches first p2p lending service in Switzerland

wiseclerk 1 Comment

Swiss Cashare.ch recently launched as the first p2p lending platform in Switzerland. The company, owned by Michael Borter (link to German language interview) and Roger Mueller has partnered with the collection agency C&S Credit Management AG, which handles all monetary transactions.
Interest rates and loan durations are set by borrowers and lenders bid in a 14 day auction (minimum bid amount is 500 CHF which is approx 500 US$). If the loan is fully funded further bids in the remaining auction period will cause the interest rate to drop in 0.1 percentage steps, while old bids are outbid.

The fee schredule includes:

  • For lenders and borrowers: 5 CHF fee for identification process
  • For borrowers: 19 CHF listing fee
  • For borrowers: 0.75% of the loan amount per year servicing fee
  • For lenders: 0.75% of the loaned amount per year servicing fee

This results in borrowers having to pay even if their loan does not fund.

An unusual point in the process is that lenders have to sign a written contract for each successful bid and send it via postal mail to Cashare. That seems a bit uncomfortable to handle. 

As Cashare launched only recently there currently are only 4 active loan listings. 

If you have used Cashare as a borrower or lender, please share you experiences in the forum. Thank you.

Lendingclub quiet period – lenders can not sign up or bid on new loans

wiseclerk

Surprisingly Lendingclub.com stopped signup for new lenders and existing lenders can not make bids on new loans (old loans are continued to be serviced). Borrowers can still obtain new loans – they are funded directly by Lendingclub. The announcement email sent out to members is quoted in this blog post.

The Lendingclub website states this message:

Lending Club has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future. Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. We will continue to service all previously funded loans during this period, and lenders will be able to access their accounts, monitor their portfolios, and withdraw available funds without changes.

The borrowing side of our site will remain generally unaffected by this registration process; borrowers can continue to apply for loans and new loans posted after April 7, 2008, will be funded and held only by Lending Club.

Until the registration process is completed, the company will undergo a quiet period and will not be able to respond to press and other inquiries about Lending Club or the registration process during that time.

On Techcrunch there is speculation that "Lending Club is looking to obtain a broker dealer license from the SEC that would legitimize its operations".

If this is the case I could not find a recent SEC filing connected to this. The last one I found dates February 13th.

Netbanker has a short statement from Prosper, essentially saying that Prosper believes itself to be in compliance with all state and federal laws.

Fynanz – p2p loans to students

wiseclerk

Fynanz.com, currently launching for borrowers in New York and Florida, offers peer to peer lending to students.

Fynanz 

The service differs from other p2p lending service in many points.

  1. The private student loans, also known as "alternative student loans", Fynanz offers have variable interest rates. Other p2p lending services so far operate only with fixed interest rates. At Fynanz interest rates are based on the LIBOR index, adjusted quarterly, plus a margin which is set by lenders. Suggested margins are 3 to 7.5% for a typical overall interest rate of 6 to 11% before fees.
    This is higher then federal student loans, but Fynanz still sees a large market, since federal student loans have borrowing limits and may not cover the entire costs of education.
  2. Very long loan terms of 10 to 20 years. Again unsual, but lenders may offer to sell loans after one year at a discount to Fynanz. There also seems to be the option to transfer a loan to a different lender (allowing the sale to a different lender).
  3. Students can select to defer interest payments while in school and for a 6 month grace period after leaving school.
  4. Loan amounts range from 2,500 to 20,000 US$ per loans. Borrowers may take out up to four loans per year to a total maximum of 160,000 US$. That is an unprecedented amount in p2p lending.
  5. The fees are pretty high in my opinion. Borrowers pay 2.9, 4.9 or 6.9% (depending on FACS) of the loan amount origination fee. Addionaly borrowers pay 1% guarantee fee into the guarantee fund until they have repaid 10% of the loan amount. Lenders pay a 1% servicing fee (not while loan is in deferment)
  6. Guarantee for lenders. Not only in case of identity theft, but also in cases of defaults Fynanz protects 50 to 100% (depending on FACS grade) of the loan amount.
  7. Fynanz applies it's own FACS grade (Fynanz Academic Credit Score) to rate borrowers. It not only relies on the credit history but also on academic charateristics.
  8. Pledge bids allow lenders to bid without having funds in account. Lenders must transfer money within 5 days of bidding.
  9. Fynanz has a "bid priority" that ranks four types of types of lenders in the following order: the highest priority lenders are friends and family of the borrower; then alumni of the borrower’s school; third are unaffiliated lenders; and fourth is Fynanz itself.

Hollowoak has some more interesting points from the lender agreement in his blog, which Chirag Chaman, Fynanz CEO commented on.

To browse listings go to the Fynanz listings page.

Further information ressources include Tom's review, the comprehensive FAQ and the new Fynanz blog answering questions.

Overall it will be interesting to see how Fynanz develops. If you use Fynanz as a lender or borrower please share you experiences in the forum.