WikiLoan Inc., operators of a groundbreaking Web-based person-to-person borrowing and lending platform, has surprised everyone by its sudden success in one of the fastest growing segments of the financial services industry, peer-to-peer lending.
The fledgling company has become the go-to place for virtually anyone looking to borrow or lend money, from $1,000 to $25,000. A world apart from the stuffy, paper-laden, and inflexible environs of the big lending institutions, WikiLoan has become a breath of fresh air in an otherwise stale industry. Using an easy-to-navigate online front-end, the company allows individual borrowers and lenders to easily work out beneficial loan terms while WikiLoan provides all the loan documentation, promissory notes, repayment schedules, online repayment capability, and even email reminders. Most importantly, the company provides screening and credit checks on borrowers, and allows lenders to select the types of borrowers they wish to consider.
The market for peer-to-peer lending is exploding, already approaching the $6 billion mark. There’s a good reason for this. With the worldwide credit calamity, the traditional lending institutions have made it difficult or impossible for many consumers to get a loan, especially non-collateralized personal loans. People turning to credit cards or short-term consumer loans face interest rates and fees that border on the insane. Credit card rates for cash advances often top 25% annually, with the annualized rate on some short term loans amounting to nearly 100%.
With WikiLoan, borrowers are usually able to access funds at rates that typically range from 10% to 16%. This is a huge break for cash-strapped borrowers, while representing a healthy return for individual lenders who might otherwise be looking at 2% or less letting their cash sit in the bank. In fact, beyond the economics, many personal lenders are finding a deeper social value in the whole process, an opportunity for them to help others in ways that a bank never would.
WikiLoan is reaping the benefits of it all by offering a solution that more and more people obviously want. The company earns revenue from relatively small fees charged for its services, $25 for credit scoring, $35 for loan documentation, and a 1% annual administrative fee on the adjusted outstanding principal from the lender. In addition, the company is already anticipating significant additional revenue streams from things like website advertising, along with new credit card and auto loan origination initiatives.
It’s little wonder that WikiLoan sees itself in a great position, riding a market that shows no signs of slowing, with revenue opportunities that increase almost daily.
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