Is this Legal?

[BusinessIdeas]

There is a company that I have seen advertising to get investors to lend them money, so that they can in turn lend it out to their loan customers, they offer investors between 2-5% interest. Surely this must be illegal?

 

[yorkshirejames]

Is this Zoopa or whatever they are called. They need to be regulated, but it certainly isn't illegal.

 

[BusinessIdeas]

No its not Zopa, they act as an intermediary, this person is offering to borrow money from 'investors' then lending it out to his own clients

 

[BusinessIdeas]

What I really dont understand about this business model, even if it is legal, is that the guy could borrow money cheaper than this from the banks, or even some credit cards, so why would he need 'investors' to lend him money at higher rates than he could get elsewhere? doesnt make any sense to me???

 

[nickjonesuk]

Is he/she a 'provvy' type woman? eg; Goes around the houses to lend and collect?

There is a forum I can't recall, I think it was singing pig! with some discussions in that area, quite profitable by the comments I remember reading.

 

[JElder]

There are two transactions here:

A loan (or possibly a purchase of shares) from the investor to the company.

A loan from the company to their customer

They are not related. As far I as know, there are no major laws concerning the payment to the company. A company making loans to consumers has loads of regulations under FSA, Office of Fair Trading, etc.

BTW, there reason they would not use a bank is that it is likely they are poor credit risks, and so pay a higher interest rate, allowing the company to pay a better dividend to their investors than they would get at a bank - but at a higher risk.

 

[BusinessIdeas]

The lending part of the transaction I agree does not appear to be a problem, because they are licenced by the OFT, I think the other part is more questionable I would think. Here is the site in question http://www.perfectpersonalinvestments.co.uk/