There, among other things, investors are allowed to sell their loan parts on the secondary market. The term crowdfunding hardly needs to be explained in Switzerland. In the following article you will find the most important information as well as the advantages and disadvantages of Swiss peer-to-peer loans for borrowers. Title: Fresh wind in the lending business: peer-to-peer loans in Switzerland. The financial community: Fresh wind in the credit business: peer-to-peer loans in Switzerland. More commentary at e-jemed.org
Loans from the crowd – peer-to-peer loans
I call it Earthwindandfire. In practice, the 51-year-old sales manager from Basel is an impressive $ 10’500 per month. In 2013 the resident of the city of Basel decided to move to the neighboring canton. The earth wind and the fire faced an economic bottleneck: since he had to pay the tax arrears of Basel-Stadt and at the same time had to take over the pre-financing for Baselland, there was a gap of 27,500 francs in his bra.
The Earthwindandfire did not opt for the money in the conventional way via the house bank or a private lender, but registered with the online credit platform cashhare. Such activities are referred to as peer-to-peer (P2P) loans, by which peers mean people in this case. Individuals who lend to other individuals, credit institutions and other financial institutions are of little or no importance.
Switzerland is just beginning with this form of fundraising – or investing for the other side.
Although this form of debt financing is still a market niche there, the growth rates are enormous. In the United Kingdom, sales have doubled to $ 1.7 billion every six months.
The business area in the USA is dominated by the providers Lending Club and Promper, which together have a share of 98%. In 2013, the two companies brokered loans totaling over $ 2.4 billion. The borrower determines the amount and duration of the loan and has a certain period of time to calculate the loan amount.
If the credit amount is reached within the term, the orders will be completed. In principle, P2P platforms do the same thing as credit institutions; they trade in third-party capital. Although interest rates in the western world are virtually zero, this does not apply to the interest rate level of personal loans from credit institutions. With the P2P platforms, on the other hand, they do. Debtors and lenders can help shape the interest rates themselves.
With the exception of the credit institutions, which are deprived of their core competence. While the debtors regain control of their financial situation, the debtors can look forward to an interesting opportunity to generate a return on investment. On the contrary: P2P platforms are not regulated and do not offer insertion protection.
If the borrower is unable to pay the debt, you have to see for yourself how to get your capital. As soon as the stock exchanges accept borrowers with poor credit ratings and defaults occur, the business model falls over – this is how it is in China. The earth wind and fire have reached their destination in a very short time. The interest he pays on his loan is between 6.7 and 6.9%.