SUBPRIME LENDING IS BACK WSJ’s Ianthe Jeanne
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Posted On: 03/07/2014 3:11:38 PM
SUBPRIME LENDING IS BACK
WSJ’s Ianthe Jeanne Duggan and Telis Demos: “A crop of new lenders is jumping into the subprime personal-loan market, wooing consumers with flawed credit who have been neglected since the financial crisis.
Many lenders backed away from borrowers with poor credit histories after record defaults on subprime home loans helped trigger the recession in 2008 … As the economic recovery continues, new entrants see an opportunity to lend at interest rates approaching 10 percent and sometimes much more. That is a premium above prime loans … less than what many consumers pay for credit cards and payday loans.
“Among firms that recently began originating loans for people with subprime credit is Lending Club … Microsoft co-founder Paul Allen's firm, Vulcan Ventures, invested $125 million in FreedomPlus, a San Mateo, Calif., lender that opened its doors in mid-February. FreedomPlus, an offshoot of firm Freedom Financial Network, is targeting about 80 million people with credit scores between 600 and 700. It offers loans up to $35,000, to be repaid over two to five years. Rates range from 7.49 percent to 36 percent, with an average of 18 percent to 20 percent."
http://on.wsj.com/P2Ny1z
WSJ’s Ianthe Jeanne Duggan and Telis Demos: “A crop of new lenders is jumping into the subprime personal-loan market, wooing consumers with flawed credit who have been neglected since the financial crisis.
Many lenders backed away from borrowers with poor credit histories after record defaults on subprime home loans helped trigger the recession in 2008 … As the economic recovery continues, new entrants see an opportunity to lend at interest rates approaching 10 percent and sometimes much more. That is a premium above prime loans … less than what many consumers pay for credit cards and payday loans.
“Among firms that recently began originating loans for people with subprime credit is Lending Club … Microsoft co-founder Paul Allen's firm, Vulcan Ventures, invested $125 million in FreedomPlus, a San Mateo, Calif., lender that opened its doors in mid-February. FreedomPlus, an offshoot of firm Freedom Financial Network, is targeting about 80 million people with credit scores between 600 and 700. It offers loans up to $35,000, to be repaid over two to five years. Rates range from 7.49 percent to 36 percent, with an average of 18 percent to 20 percent."
http://on.wsj.com/P2Ny1z
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