The financial collapse that began in 2007 left a sour taste in consumers' mouths when regard to the banking industry. But the silver lining is that this opened the door for alternatives. Established choices like credit unions picked up new members in droves.

But beyond that, other new lending options have emerged. Peer-to-peer lending and crowd-sourced funding are growing in popularity, even arguably becoming mainstream.

And, if a new study is to be believed, the next phase of this lending landscape transformation will be retailers like Walmart (WMT) and payment processors like eBay's (EBAY) Paypal launching their own invasions of the lending business.

Neither of these companies currently offers mortgages (although Walmart's Sam's Club offers small-business loans), but it's not a far-fetched scenario.

From Crisis Comes Innovation

As the financial industry collapsed, a handful of entrepreneurs positioned their companies as a viable alternative to traditional bank lending.

The first to emerge were peer-to-peer lenders, the largest being Lending Club and Prosper.

How do these companies work? First, a borrower applies for a loan. If he is approved, his riskiness is assessed and he's assigned an interest rate. Then, the loan is opened up to lenders (other individuals, i.e.: your peers) who pool the money to fund the loan.

Loans are approved for a variety of purposes: consolidating credit card debt, financing cars, even paying for weddings. What's astonishing about this groundbreaking borrowing-lending model is the amount of money that has already changed hands.

Since its establishment, Lending Club has funded nearly $1.1 billion in loans. Prosper has funded another $433 million.

The benefits are clear: For borrowers, the rates tend to be lower (even if only marginally so) than they'd pay with a credit card company or bank. And for investor-lenders, the interest rates are much higher than they would earn through a savings account or certificate of deposit.

Somewhat akin to peer-to-peer lending is crowd-sourced funding, which made its appearance not long afterward. The largest of these are Kickstarter and Indiegogo.

These platforms allow artists and entrepreneurs to pitch a product or project that, with some financial backing, they could accomplish. Individuals who believe in the project pool together their money -- often in exchange for a gift or prototype of the final product.

If enough money isn't pledged, no money changes hands. It's a low-risk way for ordinary folks to feel like they're part of the beginning of a great idea. And it's simultaneously a great way for entrepreneurs to test business concepts without going heavily into debt.

So it's no surprise that these companies have similarly been remarkably successful in just a matter of years: Kickstarter has seen over $350 million pledged and Indiegogo receives "millions each month," according to The Wall Street Journal.

Continue reading at:  http://www.dailyfinance.com/2012/12/06/mortgages-walmart-future-len...

Views: 48

Reply to This

"Destroying the New World Order"

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

TOP CONTENT THIS WEEK

Latest Activity

Kim Smith commented on Boris's page WATCH: Warren says cutting aid to Israel
"Elisabeth: if you really are willing to cut aid to Nazi israel: I will vote for you and hold you to…"
19 minutes ago
Profile IconTerrence La Cava, Elma Cannon, Frederick Gregory Meagher and 1 more joined 12160 Social Network
1 hour ago
Maas's photo was featured
1 hour ago
Sweettina2's blog post was featured

List of Food Products, Cosmetics and Vaccines Made Using Cells From Aborted Babies

SENOMYX: List of FOOD companies using FETAL CELLS from aborted babies to flavor.…See More
1 hour ago
Chris of the family Masters's discussion was featured
1 hour ago
Boris favorited Central Scrutinizer's video
1 hour ago
James T. Kirk posted a video

Wilderness Overnight Camping with my Dog, and how I Use My Gear

I spend a couple of days camping in the Wilderness with my huge dog Måns. Måns is a St Bernard crossed with Cane Corso and he carries his own food, bowl and ...
1 hour ago
Mrs. Tif Morgan posted discussions
1 hour ago
James T. Kirk posted a status
"Grid Down – What Does It Really Look Like https://www.theprepperwebsitepodcast.com/ep606/"
1 hour ago
Boris posted videos
1 hour ago
James T. Kirk posted a status
1 hour ago
Diana favorited MAC's video
1 hour ago
Diana commented on Central Scrutinizer's video
2 hours ago
Diana favorited Central Scrutinizer's video
2 hours ago
Boris favorited Maas's photo
2 hours ago
Boris favorited Raz Putin's blog post October 20, 2019 World Wide Demonstrations, Protests and Violent Confrontations it's been a busy month already...
2 hours ago

© 2019   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted