I'm surprised there aren't more p2p loan services in general, especially for those of us in the USA, etc.
edit: Just found out about Kiva Zip. So I guess they're making some attempt there.
Yes, thanks for bringing that up. In the US we have large commercial P2P lending services like Lending Club and Prosper.
Then there is Kiva Zip, which also does P2P loans in the US but at zero interest and an emphasis on human connection and social impact.
Kiva Zip was originally inspired / advised by Zidisha (see https://zip.kiva.org/blogs/4). Our models have some major differences though:
- Kiva Zip offers loans in the US and Kenya. Zidisha offers loans in Benin, Burkina Faso, Ghana, Guinea, Indonesia, Kenya, Niger, Senegal and Zambia, and we have no plans to enter the US market.
- Kiva Zip is interest-free. Zidisha allows borrowers to offer interest rates of their own choosing which are then bid upon by lenders.
- Kiva Zip has an office with staff in each borrower country, and works with local partners called trustees. Zidisha has no local staff at all, and no local intermediaries - we deliver everything online.
- Kiva Zip is well resourced. Zidisha is lean to an extreme, so that the cost of making the loans is just about 5%.
- Zidisha is managed by a global network of about 60 volunteers. We are a virtual organization with no physical office.
- Perhaps most importantly, Kiva Zip retains Kiva's historic expertise in liaising with local entities (hence the trustee-based organization of the loans). Zidisha's core expertise is in person-to-person communication, and we are really passionate about keeping that direct P2P connection untainted. We interfere as little as possible in the transactions between borrowers and lenders, while providing the marketplace infrastructure that makes direct P2P lending across the international wealth divide possible.
They both focus on our credit reporting system which in my opinion is an absolutely miserable metric of reliability. I don't like the thought of not being able to assist someone with their cause because they missed a few phone bills 3 years ago. It should be purely at the discretion of the person providing the loan.
From what I understand you can't even join Lending Club without a near impeccable credit score. And at that point, why would you join as opposed to heading to your credit union for a personal loan?
I just don't see the point in what they're offering.
Anyway, that's a tangent.
Domestic P2P lenders like Lending Club and Prosper may be able to shave a fraction of the cost of borrowing within the US. But I think the real windfall to be gained from P2P lending is where the local alternatives are most expensive and inefficient.
For small loans to low-income people in developing countries ("microfinance"), the global average interest rate is about 40%. It is not necessarily profiteering; their model is just incredibly inefficient.
Even zero-interest Kiva loans cost more than 30% on average to the borrower, simply because the local banks that manage the loans need to charge that much to cover their operating costs.
Zidisha bypasses all that by offering a do-it-yourself microfinance marketplace. Our operating costs are roughly 5% of the value of the loans, versus the 40% or so that is traditional in this sector. The savings get passed on to borrowers and lenders, who are free to negotiate the interest rates they find appropriate for each loan.