Peer to Peer Lending: the Next Internet Craze

Despite the revolutionary, "the future is now" hype the internet has spawned for the last two decades, some of the newest, most popular recent developments are have come full circle to medieval times.

Peer-to-Peer Lending Networks have become increasingly popular in the last few years in countries where credit is tight or difficult to access.



Yet, in recent months where an "economic slowdown" has mutated into a "credit freeze" and de facto, full-blown recession, these P2P lending networks have leapt the Atlantic and are now becoming familiar outlets for people being turned away by banks, credit unions, relatives and other standard forms of credit.

Most of these P2P lending networks operate by allowing users to loan money at their own interest rates to other users. The terms for repayment can follow terms similar to banks and others, but, by and large most loan terms seem just a notch above title loan(sharks) and check cashing shops found in a strip mall near you.

But then again, in competitive climates, rates are generally favorable for users. In other words: when the world is not in a "credit freeze" rates and terms generally come very close to those offered by traditional lenders. Unfortunately, this economic ice age has helped inflate many rates and terms to usury levels. And with little-to-no regulation, there is, potentially, no limit.

Not that banks and credit unions aren't capable of strapping people with rates and terms that are utterly impossible to repay, but doesn't owing money to a faceless corporation or street corner location seem much more favorable to owing money to a "face" with a Twitter account and, quite possibly, a henchman that will break your limbs to extort owed money?

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