I’ve been wanting to lend out money I have sitting in my savings account. I was wondering if it’s legal to do or there are specific requirements to lending out money to peers.
Hi,
In most states you will be required to get licensed and create a business which abides by Fair Lending Practices to loan money to people as a lender, this probable does not apply to one or two personal transactions say off of Craigslist for someone requesting a loan to pay bills provided your not running a business.
However the odds of someone from Craigslist actually paying you back are pretty low.
I think a good alternative is business lending as the transaction is deemed to be done by the business entity (Corporation) and is not personal. It is probable much more likely a business will pay you back as agreed as the business is determined to grow and make profits and sometimes providing loans for operating capital is the opportunity needed to advance to the next level.
GR
I hope you understand the risk of peer-to-peer lending. We know that the borrowers here often get lower rates. However, there’s no saving safety guarantee here. As well as, this money is more prone to primary risk in a longer term. Although, this worked well for many in good return.
Also, depending upon how much money you are looking to lend, you might wanna consider becoming an Accredited Investor. I think there are minimum $200K annual income & minimum $1 million net worth requirements + other qualification criteria :shocked . But if you qualify, you can participate in more organized and SEC regulated lending such as Private Placement Programs like Reg D Offerings that require full borrower disclosure and reduce your overall risk of extending credit.
I hope this info helps you.
Sincerely,
Charles
I’ve borrowed from Lendingclub and Prosper, both creditable private lending clubs lendingclub is back by Google. I’m a well qualified borrow and have used them both. You may want to check them out if you are looking to lend through them.