Thoughts on money lending in general.
I’ve been thinking about licensed money lending lately—what are my general thoughts? We’ve all considered lending money, especially to close friends and family. However, I’ve wondered how people feel about lending their money more often, like through Lending Club or Prosper. If you’ve ever been in debt and borrowed from a friend or family member, you know how stressful it can be for both parties. Imagine if your friend/family member requested a monthly loan.
When they invest, peer-to-peer lenders lend money through these platforms: They’re asking strangers (or friends) to loan them money so they can charge interest. as a Lending Club and Prosper investor. If social impact was prioritized over profit, this process would work better!
I think there’s a big opportunity to improve the peer-to-peer lending process by making it more social and transparent.
Investors would benefit from knowing the loan’s intended use and, ideally, some details about the anticipated revenue stream from the enterprise being funded. Second, I think it would be great if investors had more say over the allocation of their capital; for example, according to some predetermined criteria (e.g., a certain percentage of interest goes to charity). Last but not least, I believe that peer-to-peer lending platforms should incorporate a community element into the process, so that borrowers can receive support from other people who are also motivated by social change. If only we could improve the social aspects and openness of P2P lending. It would increase investors’ satisfaction with the process by making them feel more connected to the people they are investing in.
One major drawback of P2P lending is that it can be hard for lenders to feel emotionally invested in their borrowers. It’s possible that this misunderstanding prevents some people from putting money into P2P networks.
Conclusion
I find this to be a fascinating subject. Everyone, it seems to me, will have their own take on it, and there are many angles from which to consider it. If you don’t think interest should be charged on things like loans or credit cards, you might argue that moneylending should be outlawed. There are those who believe that charging interest is just another way to profit off of people who would otherwise go hungry or sleep rough if they didn’t have access to a cash advance. But if they come to an agreement, I don’t think it’s anyone else’s business as long as nobody gets hurt (or cheated).