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2	UPFRONT Ruben Navarrette, Jr. An Affirmative Action success story. read more...
3	UPFRONT Dr. Eduardo Padrón Sparks of understanding can be radicalizing. read more...
4	Ask Julie Understanding the power of social lending. read more...
5	First Person A look inside the world of Delia de la Vara. read more...

UpFront

Interest Rates ... high on credit, low on savings

Here you are, juggling your bills one more time. “Let’s see ... Pay the minimum on these three cards, $50 over the minimum on these two and ... no, wait; minimum payment on these four, $10 over on this one ...

Yep, that’s more like it. That’s it for this month.” Does this sound familiar?
While the interest rates that we get on our savings accounts have dwindled down to nearly zero, the current rates on credit cards, personal loans and even student loans are reaching such high levels that the life expectancy of our debt balances are beginning to exceed our own.
There may be an alternative to help cancel your expensive debt and reel in your monthly payments that is available to you without having to leave your home. In fact, it may even come from your neighbor.
Thousands of lenders are beginning help America’s economy move forward by helping fellow Americans get unsecured, personal loans at fair rates on websites dedicated exclusively to serve as matchmakers between lenders and borrowers. It is called peer-to-peer lending, or social lending.
The way you use the cash from these loans can vary from buying a new or used car, truck or motorcycle, starting or growing your business, consolidating your debts, remodeling your home, paying for school tuition, helping out a friend in need, investing or even funding your wedding or buying an engagement ring for your bride.
Peer-to-peer lending comes in two basic flavors: a loan with a fixed rate, whereby the borrower applies for a fixed-rate established by the servicing company depending on credit background, or a fixed rate that is the result of a bidding process, very much like eBay, where investors bid for your loan. Under this latter plan, you set the amount you need and the maximum rate you are willing to assume. As a borrower, you must abide by certain rules, which may include:

Loan amounts between $1,000 and $25,000

Maximum interest rate allowed varies according to the servicing company

Closing fees apply, usually starting at 3 percent of the amount of the loan, with a minimum fee of $50

Your loan is fully amortized for a period of 36 months and in many cases it can be extended to 5 years

There are no prepayment penalties and the loan balance is recalculated if you send a large payment

You must reside in a state that allows peer-to-peer lending

You must have a valid email address

You must be at least 18 years old, have a Social Security number and an account at a financial institution with a routing transit number

You must meet the credit criteria established by the servicing company

The application process is simple and according to the servicers, your loan could be funded in two weeks.
But you don’t have to be on the borrowing side. If you have money and would like to help out other people in need, you may be able to receive a higher interest than you get in the bank. However, there are risks involved, so make sure you read the Prospectus offered by the servicers before you invest.
In order to qualify as a lender, you must meet certain conditions, including:

You may be subject to suitability requirements, such as a minimum annual gross income of at least $70,000 and a net worth (exclusive of home, furnishings and automobile) of at least $70,000

If you don’t meet the above, you may still qualify if your net worth (with the same exclusions) is at least $250,000
Your investment may be as little as $25; however, make sure that you can afford to lose 100 percent of your money, since the loans are totally unsecured.
Companies that service these loans may loan their own money and are registered with the SEC. Make sure you perform your own due diligence. Do not send any money without reading and understanding their prospectus. For more information, two websites that offer peer-to-peer lending are www.lendingclub.com and www.prosper.com.

Listen to Julie Stav’s
radio program Monday through Friday on your local Univision radio station.
For more information visit
www.JulieStav.com