What do consumers do if they do not fit the “ideal” mold of conforming lenders?  I have learned  that some consumers seek out “peer-to-peer” lending websites (p2p).  I did not know much about these sites, so I took a look around on the internet.   Very interesting concept.  These websites are set up to bring together consumers with lenders that are able to do higher risk loans (personal loans, sub prime auto loans etc).  This is a marketplace where the lenders will bid on that consumer, to be able to provide that loan the consumer is in need of.

Here are a few things I found on these types of sites.  The good thing is, I think there are certain circumstances where consumers really need a loan for one reason or another.  For instance, a consumer could have a lot of different credit cards and their rate is 20+ percent.  Getting a loan with one of these lenders could benefit them even if they are paying 10-15%.    Another good aspect is this is another form of lead generation and where lenders can provide loans to consumers that need their type of services. With lending abilities getting more strict, lenders need leads of potential consumers that are looking for their type of loan.   However, are there also instances where the consumers are taking out loans for 30+%?  Yes, there appears to be instances where this is also happening.  Consumers sometimes just think they need a loan, but really the position they are in currently might be a better position compared to where they could be, in taking out one of these high interest rate loans.  These loans are usually more than the amount of a typical payday loan (another high risk loan), and tend to have longer loan terms.  These loans are often not securitized, so this becomes a very high risk loan for the lenders.

So are these sites doing more harm or good for consumers?  As a lender, is this the best way to generate leads? It appears there could be some benefits to these sites, however the consumers need to really look at the overall picture, and decide if this type of loan is really a smart financial decision.  In some instances, it is a great opportunity, but for others it could be a bad decision. Making sure the lender that is apart of this marketplace is a legitimate lender is very important to look into.  As far as the lenders, this could be a very high risk way to lend money because the default percentage is probably very high.  Are there maybe additional ways to generate leads of consumers that need these types of loans?  

Do your homework before taking out any loan.