Social Lending

I heard an interesting radio piece on the BBC last Tuesday about the emerging practice of Social Lending.

So the "social lending" part is that there are no banks involved. People are borrowing money directly from other people. Rates are lower without middlemen and Zopa, for example, charges .5% transaction fees to the borrowers and .5% annual management fees to the lenders. To reduce risk, lenders' money is split accross many borrowers.

Here's a link to a corresponding article. And here's the FAQ from the flagship social lending site Zopa.com.

I just thought was a cool idea.