Becoming a personal lender

[damien275x]

Is this possible? What are the legal requirements for lending money to individuals? As in, I have xxx amount sitting in the bank and I want to be able to issue people with ‘small loans’ ($100-200+) and have them pay a small % of interest on top of that. Am I legally able to set up such an online service, I am aware it has been done before, I figure I would rather do this with my money rather than stick it in some bastard bank and have them do exactly the same with my money.

 

[prawn_86]

I'm not 100% sure but as you are offering a financial product i would assume you need a AFSL along with appropriate company set-up, and possibly a banking license also.

The only other way you could do it is as a cash business but then have no legal recourse and need to start breaking knees when you dont get your $ back

 

[damien275x]

I'm not 100% sure but as you are offering a financial product i would assume you need a AFSL along with appropriate company set-up, and possibly a banking license also.

The only other way you could do it is as a cash business but then have no legal recourse and need to start breaking knees when you dont get your $ back

Hmm. I will have to do a lot of research

Just another one of my stupid ways to get rich brainwaves. Oh well, if I can just get 1 out of 50 ideas going well Ill be set

 

[adobee]

Hmm. I will have to do a lot of research

Just another one of my stupid ways to get rich brainwaves. Oh well, if I can just get 1 out of 50 ideas going well Ill be set

this would be like being a cashstop or pawnbroker..
you can make big $$$ I think cashstop etc have interest rates up to 25% a day if you default etc.. the problem is anyone who needs to borrow $100 from you has a very slim chance of repaying you..

 

[tothemax6]

Is this possible? What are the legal requirements for lending money to individuals? As in, I have xxx amount sitting in the bank and I want to be able to issue people with ‘small loans’ ($100-200+) and have them pay a small % of interest on top of that. Am I legally able to set up such an online service, I am aware it has been done before, I figure I would rather do this with my money rather than stick it in some bastard bank and have them do exactly the same with my money.

Yeah the biggest issue with such a business is the collection. In reality, in places where the loan sums are in the $100 region, i.e. places where no one can qualify for a credit card, the chasing will generally require extra-illegal 'persuasion' against people who are already pretty tough. That is to say, we are talking about the profession known as 'loan sharking'.
Not very pleasant, would probably steer clear .

 

[nunthewiser]

happy to help out and take $250k @ 19%, paid back within 2 weeks

please send the check to po box 1234 Geraldton WA 6530 and dont forget to attach your details for me to pay it back

thanks bro

 

[So_Cynical]

Just another one of my stupid ways to get rich brainwaves. Oh well, if I can just get 1 out of 50 ideas going well Ill be set

What would be the point?...i mean what interest could you realistically charge? 12, 15, 18, 20% :dunno: and then what percentage of troubled loans will there be? and what will be the impact of that on your return?

Its much easier to take 12% or 15% out of the market with a few clicks of the mouse and none of the hassles.

 

[niknah]

It's a good idea. Say someone had credit card debt on a 15% credit card. You have money earning 6% interest in the bank. Anything in between that is profit to the individuals involved and less money to the banks.

Here is a similar site where people loan money out...
http://www.prosper.com/

They work like this: 10 people loan out $10 each to 1 person. Then if that one person doesn't pay up, they lose $10 each. And each lender does this over many different people so they only lose on the average of amount of people who don't pay back, no big heart breaks.

The person receiving the loan has to compete the get the best interest rate, ie. the more information they give the better bids on the interest rate they will get.

 

[Josh G]

IHere is a similar site where people loan money out...
http://www.prosper.com/

I like the concept of this site – Strange there is nothing similar for Australia

 

[So_Cynical]

Here is a similar site where people loan money out...
http://www.prosper.com/

I like the concept of this site – Strange there is nothing similar for Australia

What a great idea...its a fool proof money spinner for the site owners. peer to peer lending...i wonder what the legal situation for that site is in the US and would be for similar in Australia. :dunno:

Wow how easy would it be to set up a site like that for residential mortgage's in Australia, like using the house as security to secure the loan and spreading the loan over heaps of lenders in blocks of $500 or $1000 each.

Could even create an after market for the blocks...to let lenders cash out etc, almost certainly there would be no cheap and easy way to set that up here.

 

[Garpal Gumnut]

What a great idea...its a fool proof money spinner for the site owners. peer to peer lending...i wonder what the legal situation for that site is in the US and would be for similar in Australia. :dunno:

Wow how easy would it be to set up a site like that for residential mortgage's in Australia, like using the house as security to secure the loan and spreading the loan over heaps of lenders in blocks of $500 or $1000 each.

Could even create an after market for the blocks...to let lenders cash out etc, almost certainly there would be no cheap and easy way to set that up here.

Its the borrowers I'd be concerned about.

gg

 

[Wysiwyg]

What a great idea...its a fool proof money spinner for the site owners. peer to peer lending...i wonder what the legal situation for that site is in the US and would be for similar in Australia. :dunno:

Wow how easy would it be to set up a site like that for residential mortgage's in Australia, like using the house as security to secure the loan and spreading the loan over heaps of lenders in blocks of $500 or $1000 each.

Could even create an after market for the blocks...to let lenders cash out etc, almost certainly there would be no cheap and easy way to set that up here.

Yes agree. It is a win win situation for investor and borrower. Someone with a sound knowledge of law and finance please set this business up in Australia and I will be a guaranteed investor.

 

[So_Cynical]

I found a Aussie peer to peer lending site http://lendinghub.com.au/ pretty much runs along the same lines as the US site niknah linked to....i couldn't find any legal mumbo jumbo etc other than it looks like borrowers sign a normalish looking contract.

LOL this guy wants to borrow 12K @ 12% to get married.

http://lendinghub.com.au/Loans/580/A-marriage-to-make-a-man-and-his-4-children-happy-again

 

[Wysiwyg]

LOL this guy wants to borrow 12K @ 12% to get married.

http://lendinghub.com.au/Loans/580/A-marriage-to-make-a-man-and-his-4-children-happy-again

Thanks Cynical.

He is in the high risk category and no one wants to take it on.

People defaulting on loans and professional conmen would be a major drawdown with this type of investment.