IOU Central Comes Out of Nowhere: Canadian P2P Lending Now Available!
Submitted by Dan on Wed, 02/13/2008 - 17:56
Peer to Peer Social Lending in Canada is Here!
The Toronto Star today has an article about the actual live launch of a Canadian P2P Lending Service: IOU Central.
From the article:
IOU Central, which operates www.ioucentral.ca, announced yesterday it has become the latest entrant to Canada's online social lending industry.
"Person-to-person lending has obviously been going on for centuries," said CEO and founder Phil Marleau. "We've used the Internet to facilitate this with today's technology."
Prospective clients must provide IOU Central with their bank account information and social insurance number. The company derives borrowers' credit scores through TransUnion Canada. Applicants with high credit ratings generally enjoy lower interest rates, Marleau said.
IOU Central follows the online auction platform popularized by Prosper.com and other American websites.
First Thoughts on Online Microlender IOU Central
I haven't looked through the site too much, but it does look like they've put quite a bit of work into it. I'll post a more thorough review over the next couple of days. But I must say, it is definitely sweet to see a company actually go live with a product in the Canadian Peer-To-Peer Lending Market. Who knows, maybe Canada will have even more companies than the US does in this field, with Prosper being the primary company, and Zopa just trying to get things off the ground.
Hopefully the competition for this type of microlending will really heat up, and the news will generate enough of a buzz for there to be a lot of users both lending and borrowing.
I'll make another post on the state of the entire Canadian P2P Borrowing/Lending companies shortly, since CommunityLend looks like they'll be soon to launch as well.
I'll definitely bid on a loan or two just to see what the process involves, and I'll keep everyone posted.
My very first observation of their website is that the interest rates do seem a bit low (from an investor's point of view), which is great if you're looking to borrow money. As well, there are actually bids on the loans, so if you're looking to borrow, take a look at it all yourself.
4 reponses to "IOU Central Comes Out of Nowhere: Canadian P2P Lending Now Available!"
1. Fantastic News!
It's definitely great to see that somebody finally got this off the ground! I was starting to think the whole thing was a hoax, and that we would only see placeholder web pages for the next several years. I agree with the story posted by Dan, the interest rates were a little on the low side, but then again it looks like activity has been pretty minimal. I signed up for an account, and the banking verification involves a deposit/withdrawal to your bank account. They state this could take two days to be processed; hopefully, activity will increase as more accounts become activated...
When viewing loan requests, various icons show different attributes of the borrower. (Red, green, and white) flags for (missed payment, all payments made, no payments scheduled to be made yet) respectively. So far, it looks like nobody has made any payments at all. That's the part I'm most concerned with. :) It will be great to see how this site performs once they "get into the groove" of regular operations.
Also, of the loans requested, the associated text blurbs describing the situation could have been a little more in depth. I prefer LOTS of information when making financial decisions.
I'm curious - how many people lurk at this site (microlending.ca)? You should post and share your thoughts! This is exciting stuff.
Dave.
2. IOUCentral / IOU Central Starting Up
Hey Dave,
Thanks for your post and interest. Looks like I'm in the low double digits on visits per day. But I can't really blame people, the relative lack of development in this market in Canada along with the associated lack of posts by me (seriously, there wasn't much to say) pretty much explains why. Lets hope things improve soon :)
I'm going to get my account setup today, and make at least a test loan to report back on my experience.
I'm definitely going to have to read up on the kind of mechanisms they do have in place for defaulted loans, but I really just haven't quite had the time (I'll have lots more over the next week).
I think I'll also make a post over the weekend on recommendations for borrowers, on things like you said on appropriate blurbs, and other kinds of information that borrowers like to see. Unfortunately, it doesn't look like they have a Prosper-style "vouching" system, where experienced users with good records and personal relationships with borrowers can vouch for new members with little feedback/record. At least they do have a Q&A system.
3. This is when things get interesting...
Hi Dan,
I maintain that social lending websites in Canada are going to be very successful because they are performing a fundamentally valuable economic function. Compared to banks, lenders will be earning higher interest rates and borrowers paying lower interest rates. Selling that should be like selling food to a starving crowd. Assuming the presence of anti-fraud measures and other safeguards, this is obviously a winning idea. That means your site was "in on the ground floor" of providing information to these people. :) You also have to remember that every company we have encountered so far has taken a laissez-faire attitude towards their potential customers, so people have not really had any reason to get excited on their own. I am hoping now that one of these services is up and running, we'll start seeing some more good discussions around here.
You mentioned ioucentral's mechanisms for handling defaulted loans, which is a good question. I did read somewhere on their site that they will get a collection agency involved, but I am still a little unclear on specifics. I am also curious to know how ioucentral determines whether or not a borrower is actually a homeowner. Is that information available on a credit report? Hopefully there are some checks and balances to make sure that a person claiming to own a home actually does. I am still waiting to verify my account, but if I have any interesting experiences once I am up and running I will be sure to let people know. So far I am noticing little things in their implementation I might tweak (if it were my choice), but these guys get major points in my book for getting something functional out the door.
A post containing suggestions for borrowers is a great idea. I suppose the market will sort them out eventually anyways (their requests will go unfilled), but it would be a shame if ioucentral interpreted that as a general lack of interest on the part of lenders. It would be cool if ioucentral had a forum, so everybody could kind of stay on the same wavelength. For my part, I am interested to know what different people's lending strategies will be - if you ever feel so inclined Dan, I would be happy to discuss this with you on your forum.
Keep up the good work!
Dave.
4. Laissez-Faire You Say?
Well, at least with regards to the laissez-faire attitude, I guess it likely points to how the different entities are being funded. Those with Angel and VC backing are likely to be motivated from the outside to get things launched and running. Of course, this could be a bad thing (releasing what should be "beta"), but it looks like what is needed. From what I've read, Communitylend and IOUCentral are both VC-backed.
I know that Prosper actually did agree to repurchase any loans/notes that were conducted through stolen or unlawful usage of identities. Looks like IOUCentral is going to offer the same protection: "We will reimburse lenders for the unpaid principal amount in the case that identity theft has been comitted." And that would be their spelling mistake, not mine :P
As far as I know, income is definitely not on a credit report. I have a feeling home ownership is not either, but is somewhat obvious if one has a mortgage. It looks like IOUCentral is going to have users submit this proof to them via fax or emailing them scans. I'd imagine a tax bill would be needed for home ownership, and a pay stub or employer letter for income. But authenticity is definitely another issue. Obviously stolen identity is covered, but I'm not sure what'll happen with invalid ownership/income...
From what I do know, some of the backers of IOUCentral were actually involved in setting up a similar venture in Denmark, so this isn't completely new to them.
Anyways, a web-forum here is in the works, which I think is a great idea, since Prosper had a bit of a debacle with their's, and ended up going from being useful, to heavily-moderated. But of course, feel free to continue any discussion here!
Thanks for your support and comments!
Dan
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