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Person-to-person loans attract two groups
SAN FRANCISCO (12/17/07)--Credit unions are likely to see more competition in the loan area, based a new report released Dec. 6 that examines recent growth in person-to-person (P2P) lending. The report by Javelin Strategy & Research reveals the primary users of P2P, their motivations and the potential impact on financial institutions. Demand for P2P lending services to help consumers to pay off credit card debt could grow to $159 billion from $38 billion during the next five years, Javelin predicted (Business Wire Dec. 6). Young adults--age 25-34--and high-income consumers--with incomes over $150,000 per year--are the two main groups turning to P2P lending, Javelin found. Potential savings on an interest rate or profit on a loan are the primary reasons consumers take out person-to-person loans, the study said. However, different consumer groups displayed different reasons for participating in person-to-person lending, the study indicated. For all of the 2,200 consumers surveyed, key factors were: to avoid the use of credit cards and to help someone obtain a loan who otherwise couldn’t get a loan. For higher-income consumers, the primary reason was to participate in an online lending community.
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