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With credit hard to find, person-to-person lending on the riseThe Los Angeles Times notes that more people are turning to each other to get loans during a time where it's becoming increasingly difficult to pry money away from traditional lenders. Ed Kountz, a senior analyst at Forrester Research, says it's something that's attracting people from all walks of life. "The credit crisis has put a huge crimp in the ability of the average consumer and the average small business to access credit from traditional sources," he told the paper. "In a time of tightening credit, person-to-person lending has turned into an attractive alternative." While person-to-person lending is nothing new, what is making it more attractive to some are websites that will not only put together the paperwork for a deal between two family members, but will help match a person who needs cash with a person who's looking to lend. At a time where people getting little interest in their savings and Wall Street is still in turmoil, this is an attractive option for some people looking to invest. But people like Bobbie Britting, research director of consumer lending at TowerGroup, says it can still be very dangerous. "Any borrower could have their circumstances change and find that even if they wanted to make their payments, they're not able to," she told the Times. "Most of these are unsecured loans [not backed by collateral such as a house or car] and those are the riskiest." With the number of delinquencies and defaults for the credit card industry and other lenders, consumers may want to think twice before taking the plunge in a person-to-person loan. Last week Fitch announced that auto loan delinquencies had risen in the second quarter with the June rate standing 23 percent higher than the same time in 2008, according to Dow Jones.
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