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Borrowers, I understand - but lenders???

10 October 2008 Be the first to comment

Retired member

I'm not surprised that borrowers are seeking alternatives, but I must confess that I'm a little confused about what would motivate lenders to consider "alternative" opportunities at this stage. Maybe I'm too conservative. Maybe I've spent too long at a big bank. Either way, I really hope the direct model works, grows and never bites the hands that feed it...

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A Finextra member

13 October 2008

1. The returns for an individual as lender are better. Where else can you get 10% at relatively low risk? Average default rate round 0.5%.

2. There is no middle man to go broke (ie a bank).

3. It generally works through spreading the loan(s) and the risk across many lenders and borrowers. Sort of like a bank without the CDS's....

4. The costs for the borrower are lower.

Sounds lke a recipe for success.

It's still early days and there will be hiccups but it's going to be bigger than Ben Hur.

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