Vocabulary:
Peer to peer: pair à pair
Duration: durée
Credit score: score de crédit
Collateral: garantie colatérale
Saving account: compte d'épargne
Mortage: hypothèque (immobilier)
SEC: Security and Exchange Commission (Commission de régulation des opération boursières américaine) bn: abréviation de billion (milliard au sens de 1000 x 1000 x 1000 = 10^9)
Credit default: défaut de paiement
Outstanding: en cours
Indebtment: endettement
Proprietary: en propre
Peer to peer lending
The peer to peer lending activity consists for individuals to lend and borrow money to and from other inviduals against interests through a peer to peer fund. Peer to peer lending and borrowing is actually competitive.As with all financial market, the risk determines the spread between borrowing and lending rates. The return for the lender is higher than from a bank while the borrower obtains money for as low as 3 to 5%. Although, it may go as high as 20% to cover the risk.
Important points discussed during the interview:
- The loans are not backed up by a collateral such as a mortage.
- Rates vary from day to day according to demand and supply.
- Different from person to person lending and borrowing, the moneyis funneled through a fund and the risk spread over thousands of loans.
- The interviewed investor testifies that his returns are higher than with a regular bank savings account.
- PPL is a new activity; Therefore, there is not much history to look back at to determine the loan default rate.
- £600 million were invested in PPL in the last year
- The PPL activity is not regulated. It will be by April, which may affect the returns because of red tape.
- 3 major PPL lending companies operate in the UK.
Other sources of information
Peer to peer i...
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...iced prices of 6 to 20%. But, in the end, it is difficult to make up one's mind on the advantages of this system. At no time was a credit score spoken of. The credit score is a figure that sums up the risk of lending. The competing interest rates cannot be compared if they don't refer to the exact same risk.
Two other variables enter the interest rate determination: The amount borrowed and its duration. In order to compare objectively the rates with one another, only one of the three variables must be allowed to fluctuate. Because they use a proprietary credit risk evaluation method, it is quite difficult to determine which of traditional financing methods or P2P is the most advantageous.
Therefore, neither a borrower, whether an investor or a consumer, nor a lender can rationally make up their minds on which method to use given the limited information provided.
At the end of the day, credit shows true financial independence and having excellent credit can get you what you want and save you a lot of money in the long run with the possibly of lower interest rates. Credit is a universal number that landlords, lenders, finance company and even an employer look at to determine your
These ratios can be used to determine the most desirable company to grant a loan to between Wendy’s and Bob Evans. Wendy’s has a debt to assets ratio of 34.93% while Bob Evans is 43.68%. When it comes to debt to asset ratios, the company with the lower percentage has the lowest risk. Therefore, Wendy’s is more desirable than Bob Evans. In the area of debt to equity ratios, Wendy’s comes in at 84.31% while Bob Evans comes in at 118.71%. Like debt to assets, a low debt to equity ratio indicates less risk in a company. Again, Wendy’s is the less risky company. Finally, Wendy’s has a times interest earned ratio of 4.86 while Bob Evans owns a 3.78. Unlike the previous two ratios, times interest earned ratio is measured on a scale of 1 to 5. The closer the ratio is to 5, the less risky a company is. From the view of a banker, any ratio over 2.5 is an acceptable risk. Both companies are an acceptable risk, however, Wendy’s is once again more desirable. Based on these findings, Wendy’s is the better choice for banks to loan money to because of the lower level of
Through the use of statistics, expert testimony, appeals to emotions, and a few comparisons, Scurlock tries to convey his message, saying that because the lending industry’s main concern is maximizing profits, they have made it impossible to not have a credit card and avoid being taken advantage of. He accomplishes his goal of clearly relaying his argument to the audience with the high amount of credible support he provides.
Finally, I will do a financial forecast in order to figure out firms’ ability to repay its loans. I will use simple percentages-of-sales forecasting technique. I will use existing trends in my forecast to show the implications of current policies before making my own recommendations. During my forecast I will use New Era Partners loan to find out the interest rates. I will make the short-term debt as my plug.
...t capable of loaning funds from their accounts. In addition to this, there are limited selections pertaining to this investment option. The participant that is contributed by a participant should not exceed $11,500 dollars as well. The entire system is not complicated which makes it ideal for everyone. It is even considered one of the best features it possesses. Yet, the liabilities are usually shared by both parties. With this option, both the employer and employee could enjoy the same perks and benefits.
every 100 contracts the company buys 2 will default on the loan. There is a 2% chance of default
The AIGFP was presented with an option. Why not insure CDOs against default through a financial product known as a credit default swap? The chances of having to pay out on this insurance were highly unlikely, and for a while, the CDO insurance plan was highly successful. In about five years, the...
sought after and one group has it and is willing to lend or give it to the other, not a
The times interest earned ratio uses a company’s income statement to assess its ability to meet long-...
Statistics suggest about 32% of consumers are going to over estimate the rating on their credit, while only around 4% are going to under estimate the rating on their credit. Ones who will overestimate the quality of their credit are most likely less informative about finances overall, and will be more likely to have learned about their financial knowledge, unfortuanately, the hard way. Also the consumers who are going to overestimate the ratings of their credit will be less likely to properly budget, effectevely save their money, or learn to invest it often. With another example, in 1999 it was found that about 40 percent of mortgage borrowers didn't understand what the interest rates that were associated with their loans were.
1a: The key players in the market; and the types of investments available to both individual investors and institutional investors,
The lifestyle of people across the world is developing rapidly. As there is a growing concern for people about the lifestyle and way of living, the scope for the microfinance industry is also at a growing pace. A large number of people across the world prefer finance for the purpose of purchase of consumer durables as well as lifestyle products. As the credit card EMI options are more expensive, people prefer NBFCs for the purpose of consumer durable loans. The project done in bajaj finserv explains the role of NBFCs in the consumer durable loans and the procedure undertaken in order to disburse the consumer durable loans.
Barra Airways has an interest coverage ratio (ICR) of 18; this means that Barra Airways is not burdened with a large amount of interest payments on existing debts. Therefore, using debt does appear to be an attractive source of finance. This is because Barra Airways existing interest burden is low, meaning that to increase it would have a reduced effect on the company’s net profit. However, EasyJet has an ICR of 30.88, considerably larger than that of Barra Airways [5]. Lenders may look at this data and conclude that Barra Airways is a riskier company to lend too than others in the same industry; this will result in a higher interest rate on any debt taken out.
The first advantage of interest income is interest income is more sustainable and high quality of earning to a bank from loan, share financing, hire purchase and others. The interest from a loan is a fixed interest agreed to charge by a bank to the borrower with a certain period of time. If the borrower is responsible, the repayment will be made in a due date with the actual amount. The hirer, the person who has option to buy goods in accordance is required to pay the monthly installment to the bank under the hire purchase agreement. This kind of payment is sustainable as the hirer has already signed the agreement with the bank. The goods will be obtained by bank if the hirer
An important term that is cropping up everywhere nowadays is “Microfinance”. It is important for every person interested in the field of finance to be aware of this term, as in the coming days Microfinance is expected to be one of the brightest and the most appealing sector of the Indian Economy.