Lending Circles Help People Create Loans Safely With Community Supported Loans
If you are low on money and low on credit, it is easy to fall into the debt trap if you need to borrow money . Alternatives exist and Lending Circles is a new loan option that allows people to securely create loans with 0% loans in their community.
Lending Circles works a little differently than Lending Club or Kiva. It brings together 6-10 people who personally determine the loan amount for the group. Each person takes turns borrowing and lending, and the activity is reported to the credit bureaus, and the interest remains at zero percent.
In an interview with NPR, founder Jose Quiñones explained that this type of activity already occurs frequently in communities, but Lending Circles offers a way to legitimize these loans. He said:
In fact, we recognized this activity as pure financial activity, which simply needs to be formalized. We did it this way: we asked people to sign promissory notes so they could participate in the program, and then report it to the credit bureau. This is how we help people create and set their credit ratings by reporting this activity that is already happening in the community … You can have 10 people, and unofficially it could be your neighbors, it could be your, you know, relatives, could would be your employees. And then they will all agree to, say, put a hundred dollars in the bank, so that you then take that thousand dollars. And then they agree on who will be the first to take that thousand dollars, and they do it in turns until everyone has a chance to get that thousand dollars.
The idea seems to have more to do with creating a loan, but if you are borrowing money from friends or family, this seems like a worthy option to help increase your credit in the process. For more information, follow the links below.
Lending Circles through NPR
Photo 401k 2012 .