Manchester England (PRWEB UK) 19 August 2013
In this interview, Lee talks about the USP's of the eMoneyUnion proposition and other important crowd funding matters;
Transition to FCA regulation.
Turned Down Peer to Peer Market
Zopa, Ratesetter and Funding Circle
Great Savings Rates
Notes to editors:
The eMoneyUnion platform acts as a matchmaking and underwriting service, presenting pre-approved individual borrowers to individual lenders, who can then decide to lend or not. Loans can be requested for amounts between £1,000 and £10,000 for any purpose including cars, consolidation and we will also encourage applications from those with low credit scores, the borrowers will however need to find a suitable Personal Guarantor with a very good credit history.
Individual lenders monies are ring fenced in a Lloyds TSB Bank PLC client account. Additional security is provided by the eProvision fund which has been created as a back stop to maintain regular interest repayments to personal lenders in the event of non-payment by the borrower and Personal Guarantor.
The total high cost credit market is currently estimated to be worth £8BN a year and a large percentage of the UK’s most financially vulnerable are trapped with these unaffordable and often short term lenders. If these borrowers had access to longer term loans and at a fairer rate, their financial and mental well-being would be dramatically improved.
eMoneyUnion are not involved in the high cost credit or payday loan market i.e. 100’s% + APR. One of our key objectives is to get people out of an expensive debt spiral and onto a fairer interest rate. This consolidation process, in the majority of instances, improves the credit rating for people and opens up even cheaper access to credit further down the line.
In recognition of the particular financial difficulties payday loan borrowers are facing, and in a positive move by the Government, the law has been changed to allow sufficiently resourced local credit unions to increase the interest rates charged, to reflect the risk of lending to financially challenged borrowers from 2% to 3% per month.
A consequence of the credit crunch has been the devastating explosion of payday loans. Millions of people who had nowhere else to turn after having their overdraft pulled or their credit card limits reduced have fallen into a financial payday trap.
To encourage individual lenders to provide a loan to someone with a less than perfect credit history, we needed to come up with additional incentives i.e. a higher rate of return for the lenders was a big driver, but the critical element was providing as much security of loan repayment as possible. After consultation with prospective individual lenders, we came up with the Bank of mum and Dad concept, insisting that borrowers obtain a Personal Guarantor to support them in their loan application.
We do not rely on credit checks alone and we will consider proposing all applicants for a loan, providing they can prove to us that they can afford to repay the loan back.
There are an estimated 50,000 active social lenders in the UK, all wanting a better return on their money and happy to be part of a sharing economy. The majority of lenders will spread their risk over various Peer to Peer platforms. The largest platforms by monies lent are No. 1 Zopa, No. 2 Funding Circle and No. 3 Ratesetter.
The three largest platforms are members of a recently formed trade association, The Peer 2 Peer Finance Association. We are fully supportive of The Associations Rules and Operating Principles. Once eMoneyUnion has a notable scale of completed loans live on the platform, we will be applying to join. We have shared our business plans with the Independent Chairman of The Association Christine Farnish who has confirmed that “the whole Peer to Peer activity will be regulated end to end by next spring.”
eMoneyUnion lenders can choose the amounts, time periods and Borrowers Risk Ratings “AAA, AA or A” that they wish to lend to. The rating is a combination of the borrower and their Personal Guarantor.
For further information about this press release, please call eMoneyUnion: Lee Birkett on 01625 750027