Archive for October, 2008
P2P Liquidity Concerns at Prosper and Lending Club - No Problem for YadYap
Posted by YadYap in Payday Lender, Peer-to-Peer Lending on October 21st, 2008
In an online Wall Street Journal article titled “Peer-To-Peer Lenders Get Into Secondary Market” Arden Dale discusses the reasons for, and benefits of having a secondary market is association with peer-to-peer lending platforms. Here are the main take-aways from the article as well as how YadYap’s system differs.
- Prosper and Lending Club both saw the need and demand from current lenders to have a secondary market to create liquidity.
- A secondary market is a great option to give lenders, but overall costs to lenders will rise.
- Yadyap’s model creates almost instant liquidity by offering short term 2-4 week payday loans. No secondary market is needed to achieve liquidity for lenders.
I am sure it was apparent to the founders of both Prosper and Lending Club before they launched that there would soon be a need for liquidity. The lenders within both platforms have now shown a demand for it and both companies have responded well. There just simply are not too many people out there that want large amounts of money tied up for three years. We commend both Prosper and Lending Club for taking the initiative and paving the way for liquidity in the new world of P2P lending.
The secondary market is critical for the growth of these traditional P2P platforms (assuming P2P has been around long enough to use the word traditional). With this new addition, however, will come more expenses for lenders. Currently there is a 1% fee to sell a note on Lending Club. These fees are necessary and in relative terms small, but none the less, they are costs that will reduce lenders overall returns.
YadYap offers short term (2-4 week) payday loans. This model provides almost instant liquidity for lenders. Active lenders with multiple loans outstanding will have the luxury of seeing loans turn over daily and will have those funds available in their account to fund new loans.
We are excited to see our system play an important role in the peer-to-peer lending world. We believe that lenders will experience the excitement of the YadYap model within weeks of placing their first loans!
Related articles
- lending club, my best investment of 2008 (bripblap.com)
- Peer to Peer Lending: Harvard Business Review Breakout Ideas of 2009 (bargaineering.com)
- Peer to Peer Lending Offers High Returns In Low Rate Environment (frugaldad.com)
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Prosper’s September 2008 Market Survey Shows Critical Need For Yadyap’s Short-term Lending Platform
Posted by admin in Payday Borrower, Payday Lender, Peer-to-Peer Lending, Underserved Borrower on October 14th, 2008
- Prosper’s September 2008 market survey shows a sharp decline in P2P subprime loans that are successfully funded.
- The report also shows that peer-to-peer (P2P) lending amounts are shrinking.
It is not news to YadYap that there is a dire need for a good solution offering short-term loans to consumers who otherwise would go without the ability to get any financing, or resort to a traditional payday loan. The payday lending industry takes a great deal of heat for high interest rates charged to borrowers.
This begs the question; who else can fill the gap that lies between conventional lending or current peer to peer lending and a traditional payday loan. The gap is wide and the need is real. Since Prosper’s inception there have been close to 200,000 Prosper loan listings go unfunded. Where have these people gone to meet their short-term need for money? Yadyap is central to solving the lack of subprime borrower representation.
It is also interesting to note in Prosper’s report that P2P loan amounts being funded are shrinking in size.
Year-to-date the average loan amount is $6,047, down 13% or $925 compared to the same period last year. In September 2008 the average loan amount was $5,544, down 23% or $1,631 from September 2007. This indicates that lenders on Prosper are being more cautious by directing their bids toward listings with lower requested loan amounts.
YadYap (payday backwards) will also fill the need of peer-to-peer lenders to fund loans with shorter terms, while at the same time helping someone with a short-term financial need.
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