Introduction to Lending between Friends and Family
What is peer to peer lending?Peer-to-peer lending, Social Lending or P2P loans is when individuals agree to borrow and lend between each other with a promise to repay the loan principle including interest without using a traditional bank or financial institution. Although social lending is not new, thanks to the internet, there is now a novel and easier way to borrow money without having to stand inline at a bank branch!
Lending Hub provides a peer to peer lending service that emphasizes social lending or community lending and provides a way for borrowers to obtain a loan from their network of friends and family using a discrete and simple loan application process. Lenders are able to view their friend's loan on Lending Hub and place a bid on the loan either for the full or partial amount.
What kinds of loans are offered on Lending Hub?Lending Hub allows borrowers to post a loan listing on the Lending Hub community for a 3-year unsecured personal loan which comprises 36 equal monthly repayments at a fixed interest rate.
These loans can be used for a range of personal requirements such as refinancing another loan, credit card consolidation, financing a car purchase, taking a holiday and many other uses.
How can Lending Hub offer better rates?Lending Hub provides a way for borrowers and lenders to 'cut out the middleman' and has lower overhead costs than a physical bank would have (such as buildings for branches). Lending Hub delivers its service purley via the internet and through the digital medium. In addition as many of the loans are between friends and family the loans can be thought of as true 'social lending' or 'community lending' and some of the lenders may elect to provide loans at lower rates than a traditional bank would normally.
Who is servicing the loans?Lending Hub will be servicing the loan on your behalf. This includes the electronic transfer of the loan amount at settlement and processing the repayments between the lender(s) and the borrower. We manage all the paperwork and calculation of amounts to repay!
Does it cost anything to borrow or lend?Lending Hub has a small application processing fee of $30 for borrowers who want to be processed and post their loan listing online. We also charge small loan settlement fee to borrowers (if the loan listing is fully funded by the lenders when the loan listing period ends) and a small monthly service fee to lenders. For more information please see our section on Lending Hub Fees.
How do I start borrowing or lending?Simply have your personal details, driver's licence and bank account details handy and follow one of the links below to get started on Lending Hub. Applications are quick simple to complete!
If you want to start a peer to peer loan on Lending Hub go to: Online Borrowing Application
If you want to start lending on Lending Hub go to: Become a verified Lender
Who can borrow?You can borrow money from the Lending Hub community if you:
A good credit history and a high income is not required, however it may have an impact on the interest rate that lenders are willing to lend to you.
How are interest rates and payments calculated?The initial maximum desired interest rate is set by the borrower when they post their loan online, and then the lenders can bid on the loan and elect to offer to lend at a lower interest rate. There may one or more lenders that bid on the loan and when the loan listing period closes with sufficient bids to be fully funded the weighted average interest rate of all winning bids is automatically calculated.
The repayments for the loan (which is 36 equal monthly repayments) are then reculated based on the final weighted average interest rate.
Will lenders know the borrower's identity?Lending Hub takes the privacy of its users very seriously. When a new user registers on Lending Hub, they can select a ‘username’ or a nick name, which provides anonymity to the general public. Lending hub encourages borrowers to be honest about themselves during the application process, so they can build trust with the lenders, however only limited information about a borrower can be viewed by the lender. Only a lender who has been invited by a borrower will be able to match a particular borrower's username with their real identity (which is at the borrower's discretion).
Can I lend to someone that I already know through Lending Hub?Lending Hub is designed for lending and borrowing between friends and family. The first step is to make sure your friend is registered with Lending Hub. Then you can search for their username or loan title on the website. Alternatively, the borrower can send the link to the lender once the loan is posted, and the lender can then bid on the loan.
Who can lend?You can lend money on Lending Hub to your network of friends and family if you:
Should I seek professional tax and financial advice?Before lending or borrowing (whether on Lending Hub or elsewhere) we reccommend that you seek professional advice that suits your personal circumstance and objectives. Lending Hub does not provide financial, tax or legal advice in respect of any of Lending Hub's services.
How do I diversify and spread my risk as a lender?You can choose to lend to one borrower or to many. Depending on what your lending objectives are we recommend that you diversify your portfolio by lending to a number of people in small amounts and to not ‘place all your eggs in one basket’. This way you can diversify your potential risk and minimse the impact on your portfolio returns in the event that one of your borrowers defaults.
How do I lend money?You can lend to your friends and family through their online loan listing page (See all the current loan postings). Once on your friend's or family member's loan listing page you can see their profile, see how much they want to borrow and also more information about themselves and how they want to use the loan proceeds.
Once you have read their loan profile simply place a bid on the loan (of course your account must be prefunded to start lending and you must be a regsitered lender) by selecting how much you want to lend and at what interest rate.