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Afluenta is the first and only social network of Latin America which provides peer-to-peer lending. The ultimate aim of Afluenta’s members is to lend or borrow money from each other so that traditional bank intervention is avoided and, this way, improved returns can be earned.
Massive access to Internet and the spread of social networks have fostered the rapid growth of peer-to-peer lending transactions which require no banking intervention at all. Peer-to-peer lending networks were first launched in the UK in 2005, and have spread to more than 17 countries since then. United States, Germany, Japan and Spain, among others, have embraced this kind of networks.
Afluenta has developed “el crédito humano” Afluenta has developed a loan process and its own technological platform on which borrowers and lenders work jointly lending money to each other and no mediators intervene in the process. The process starts when the parties sign up on the platform. A credit assessment about the applicant’s records is later carried out through Veraz/Equifax. Once the assessment is approved, the parties can choose between:
• Auction Style Loans: applicants apply for a loan by sending their credit information and, attached to it, the amount of money, term, and highest interest rate they are willing to pay. Their request is then published in an electronic auction for a period of 7 (seven) days. On it, various lenders assess the request and lend small sums of money (microloans) until the full amount requested by the applicant is fulfilled.
• Expert Style Loans: applicants apply for a loan in the same way and the Expert system provides them with the interest rate which matches the category they belong to. Categories are determined by the applicant’s credit profile. On this loan style, money is not lent to individuals but to the categories that the system recommends to lenders, according to each lender’s return preferences and credit profile. This way, money is allocated into micro-loans granted to many applicants.
In both cases, micro-loans may consist on a minimum of ARS $100 up to a maximum of 5% of the amount of money requested. As many lenders are needed in order to fulfill a loan, credit risk decreases. The borrower obtains a loan at a lower cost and lenders earn improved returns out of their money. Loans are granted for a minimum of ARS $5.000 and a maximum of ARS $30.000, to be paid back in terms of 12, 24 and 36 months.
Legal Framework Peer-to-peer lending is based on a regular management Trust, on which (a) lenders are Trustees (they transfer the money to the Trust so that it can be granted in loans) and, at the same time, they are beneficiaries (they are entitled to collect the payments that debtors make under the loan they participate in), (b) Afluenta is the administrator and Trustee.
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