Social lending ‘beats building societies’

The recent crisis that has seen the Northern Rock building society swarmed with customers looking to withdraw their savings is proof of how social lending is a better system, according to one industry operator.

With social lending, people arrange to borrow from or lend money to each other at an agreed rate, usually via a website.

According to one such website, Zopa, one of the main benefits is the fact that there is complete transparency in the transaction.

A spokesman said that this compares well to the “infinitely more complex and opaque behind the scenes workings” of banks and building societies.

Giles Andrews, managing director of the company, says that for many people the biggest appeal is “the chance to pay a lower rate of interest on their borrowing”.

Northern rock revealed last week that it had borrowed money from the Bank of England in order to meet its obligations to customers.

This has led to many of its clients withdrawing their savings amid fears that the building society is in trouble.

© Adfero Ltd

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