We have launched the new Lending Hub site design and theme in September 2008.You can browse around the site and join Lending Hub using a valid email address. We’ve also setup for borrowers the Online Loan Calculator that estimates the monthly repayments on a Lending Hub peer to peer loan.
You can also see information and how to pages at the Lending Hub Peer to Peer Information Centre.
We will soon launch the fully functional borrower and lender application forms that will allow users to register with us and to start borrowing and lending.
Stay tuned and look out for Australia’s newest banking experience!
The Lending Hub Team
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Very soon (in late July) we’ll be starting to post some new help and ‘how to’ pages. Items we’ll cover include:
- How peer to peer lending works
- What you’ll need to provide during a borrowing application
- What you’ll need to provide if you want to start lending
- Information on Lending Hub’s credit grades (we’ll be processing borrower details to determine a credit grade for each borrower)
- How to create the best possible loan listing (for borrowers)
Check http://lendinghub.com.au/Info/Personal_Loans.php early next week for an update.
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It’s been awhile since we last updated you on our development progress and when we expect to launch. Firstly it may be good to put things in perspective and to give you a little overview of what we are trying to achieve…
We are designing Lending Hub to be a truly online platform for matching borrowers and lenders rapidly without any of the hassles of a physical bank. To achieve this requires a high degree of automation and development of our compliance systems, which is where our focus has been for the past 2 months.
Secure Automated Processing
We are aiming to achieve virtually all processing of borrowing and lending applications online in real-time. The Lending Hub system will check and process a borrowing application within less than a minute (assuming you have a traceable credit history and have provided all required information). Now instead of waiting at a bank or searching for your nearest branch we’ll be able to process your details in less time than it takes to grab a coffee!
If we require any physical documents (e.g. payslips or bank account statements) you can upload a scan directly to your Lending Hub account. No need to mail us anything (unless you really want to of course).
Compliance
Australian legislation is quite explicit in the requirements for consumer loans, if you intend getting a loan (from any lender not just us) then check out The Uniform Consumer Credit Code at http://www.creditcode.gov.au/. This code is designed to protect consumers by clearly defining the terms of a loan and the loan agreement.
To meet our compliance requirements under the UCCC our loans agreements will be available for reading by the anyone prior to entering into an agreement or starting a loan listing on Lending Hub. This level of transparency is relatively unheard of in Australian financial services (after all how many banks do you know that show you the fine print before they process your application?). In addition we’ll clearly stipulate our fees and your obligations under the agreement.
No early repayment fees!
Most lenders in Australian will charge you if you want to repay your loan early…yes, that’s right! if you are a good borrower and have the money to repay early they penalise you with complicated formulas and more fine print.
Lending Hub personal loans will let you repay early the principal and interest you owe at any time (assuming you’re not behind on any repayments of course) without any additional fees or penalties!
Launch
At this stage we are trialling p2p loans with a private group of borrowers and lenders and except this will clear the site for launch in either August or September 2008!
We’ll keep you posted in the meantime with some interesting topics.
Lending Hub Team
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The Comparison Rate
When assessing the effective cost of a loan, you will need to consider a few possible charges and not just the interest rate. Other costs and charges can include bank fees and up-front or settlement charges. The comparison rate (also called Mandatory Comparison Rate or MCR or the Effective Rate) is an interest rate calculated by the lender that lets you compare the total cost of a loan between products and lenders. This total cost is expressed as an annual interest rate.
The Comparison Rate is calculated using a financial repayments formula that takes into account the amount and duration of the loan, the repayment frequency (e.g. weekly, monthly) , the interest rate and any fees and charges levied on the loan. As fees and charges set by lenders can vary between customers and products the Comparison Rate will help you compare many different types of loans, although it is important to remember that the cost or interest on a loan is just one factor that you should assess in determining whether a loan is suitable for you and will meet your needs.
Other factors that may increase the effective cost of a loan but are worth considering include the flexibility to repay early or redraw or the level of documentation required to obtain the loan.
Lending Hub’s P2p Loans
Lending Hub will provide Comparison Rates on all loans listed on the Lending Hub once we go live. The Comparison Rate is required under the Consumer Credit Code and the calculation for Lending Hub loans will include:
- The maximum interest rate as set by the borrow or average interest rate as set by lenders
- Settlement fees
- Any other fees we may charge to the borrower (currently nil)
Costs that are excluded are:
- Government and statutory fees
- Fees and charges that are event-based and may or may not apply throughout the life of your home loan, e.g. Late payment fees, redraw fees or early repayment fees
More Information on Comparison Rates
For more information you can visit the following sites that provide further information:
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The ‘credit crunch’ has now lasted for nearly year and is starting to have a fairly noticeable impact on consumers and borrowers.
The inability of many non-bank lenders to obtain funding for their loans means that there are now few competitors to the traditional banks (Wizard has been reported to be up for sale and RAMS was bought by Westpac last year). In addition the banks are now putting interest rates up to maintain their margins and profitability on loans at the consumers expense.
Combine this with the meteoric rise in petrol prices, increases in the underlying cash rate (which drives up the rates on home loans), static or falling house prices and increasing inflation and you get a fairly dire picture for many consumers across Australia,
Currently a consumer who wishes to borrow has fewer choices than say 1-2 years ago and at a much higher interest rate and given the credit crunch most banks would be looking to restrict whom they lend to (even if this means not lending to a potentially good borrow but with an unusual history).
What is the credit crunch?
This was originally driven by a rapidly rising level of borrower defaults and falling property prices in the US market which led to significant losses by lenders. This then led to a loss of investor confidence which has struck both equity and debt markets making debt (principally for businesses) hard to obtain and often at significantly high interest rates.
Opportunities for borrowers
I suggest that even though loans are more expensive and harder to obtain that you shop around your home loan or whatever loan you are looking for before signing up to anyone. Make sure that you compare rates (you can always use the Mandatory Comparison Rate that each lender is required to provide by law to do a quick comparison) and ask each bank to give you a better deal. There’s no harm in trying after all!
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If you’re looking for more information on peer to peer lending, social lending, social loans, micro lending or person to person finance then check out some of the blogs and resources below:
Peer to Peer Lending Blogs
US Based Peer to Peer Lenders
Get informed and read up about social lending before you start borrowing or lending and you’ll see that peer to peer loans are starting to become quite commonplace in some parts of the World
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Christmas and Valentine’s have just gone by and Easter is coming up, there’s always things to buy for family and friends and the cost of living just keeps on shooting up. Now we are living once again in a time of rising inflation, high interest rates and high oil prices - all of this comes at the end of a very good economic period for Australia and most Australians.
How is all of this usually financed in Australia? Plastic credit or credit cards or revolving unsecured personal loans (store cards also fall into this category) …everyone uses to a greater or lesser extent and now many Australians are once again getting sucked into the trap of spending a lot to maintain a costly lifestyle and paying for it with future earnings using credit cards.
Things you should be looking to do to keep the plastic credit monster at bay included both looking at better sources of funding and keeping a tight control of you expenses. Here are some things you can do now to help yourself:
- Start using the credit cards that offer low interest rates on purchases with an interest free period
- Keep a weekly budget so you know what are the essential items you need to spend on and what’s a luxury
- Plan ahead for special purchasers and check out the sales (remember as we possibly start heading into an economic downturn retailer begin to discount!)
- Consolidate multiple credit cards. In particular get rid of those very expensive store cards that give you some side perks e.g. free fuel but charge you through the nose on purchases
- Pay off those credit cards each month on time, this way you won’t have to pay interest fees each month on top of your regular credit card bill
There are also other ways to live to reduce your dependency on plastic credit, how about paying in cash once again? You’ll see the cash line dwindle at the ATM every-time you make a withdrawal which can help discourage spending.
Hopefully these tips will help you get through the Easter holiday period in financial health.
‘Til next time.
Lending Hub
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