Qifang is a stealth P2P lending site for Chinese student loans. Most college education in China is financed by group borrowing associations rather than bank loans. Qifang is trying to bring that group lending dynamic online.
The company expects interest rates on most Qifang loans to be between 8 to 12 percent. The interest rate will be based on how many lenders bid on each loan. The site will recommend that lenders invest in a portfolio of loans to reduce their risk, but if they choose, each one can put all their money in a single loan. Since there is very little credit history on individuals in China, the site will use other proxies to calculate risk. Each borrower must scan in their national ID cards to verify who they are, and list their school, major, grades, hometown, parents ID cards and income. Chin is creating partnerships with the schools directly, so that the information students supply can be verified and so that loan payments can be made directly to educational institutions.
There will also be an interesting social calculus that takes place on the site. Since each borrowerâ€™s parents will be named on the loan, failure to pay it back would result in a shameful losing of face for the parents. It will be interesting to see how this plays out in a place where social pressure is very powerful.
"Qifang" translates to â€œbloom,â€ and comes from the Chairman Mao quote, â€œBai Hua Qi Fangâ€â€”â€Let a hundred flowers bloom.â€
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