Become A Personal Loan Lender With Pigeon Loans

You are currently viewing Become A Personal Loan Lender With Pigeon Loans

Become A Personal Loan Lender With Pigeon Loans

  • Post author:
  • Reading time:5 mins read

I was wondering what would it take to become a bank or a lender. In my research I found something interesting. I found Pigeon Loans. Pigeon Loans is a peer-to-peer lending platform aimed at letting you lend or borrow money from family members or friends. They currently operate in over 40 countries. Pigeon Loans facilitates by creating contracts based on the agreed loan amounts and terms. The borrower can counter offer the loan terms and the lender can choose to accept or create another counter offer.

How Much Can You Lend Or Borrow?

Setting up an account with Pigeon Loans is an easy process. You can fund a loan and make payments to a loan using your bank account or credit card. To get started, all you need to do is to create a loan contract by answering 3 questions.

  1. What is the Loan Amount?
  2. What is the Length of the Term in Months?
  3. What is the Desired Interest Rate?

With the information entered above, you have created a loan contract. Next, you need to enter an email address to send it to. If you know your sibling needs money, send them an email offering a personal loan of $500. They can choose to accept the contract or they could counter offer the loan amount, interest rate, or length of the term. An electronic signature binds the contract. At this time, the maximum amount you can lend or borrow is $250,000 with a maximum interest rate of 99% and a maximum term of 84 months.

How Does Pigeon Loans Make Money?

Pigeon Loans does not charge a percentage of the loan interest. They do not earn commissions on their peer-to-peer loans. For Lenders, Pigeon Loans is completely free. For Borrowers, the use of Pigeon Loans requires a subscription of $4.29 per month. Signing up is free, but using the service with 1 or more loans will cost you $4.29 per month. You must keep that in mind when agreeing to loan terms and interest. You will want the term length to be as short as possible to minimize your subscription costs. Pigeon Loans also charges conditional based fees to borrowers, but more on that later.

What If Your Friend Or Family Member Does Not Pay?

As stated on Pigeon Loans “Statistically speaking, when individuals track payments, agree to legal terms, and add formality to the loan process between friends and family, loans on our platform default less than 5% of the time compared to more than 13% when not using Pigeon Loans.”

Pigeon Loans cannot guarantee that you will get paid on time or at all. However you can use Pigeon Loan’s platform to send reminders or overdue notices. Pigeon Loans contracts are legally binding contracts. If you choose to take further legal action with your lawyer or go to court, you can use Pigeon Loans Contracts to win your case. If you want to give the borrower more time to pay, you can create an extension contract to extend the loan. However any payment made by the borrower during the extension term will be charged a 1% fee to Pigeon Loans.

If the Lender and Borrower can come to an agreement, the contract can be cancelled all together with all remaining debt wiped out.

Other Ways To Pay Your Loan

Pigeon Loans offers a payment tracking system called Freebird Payments. If you prefer to use CashApp, cashiers check, or hard cash, you can. All you need to do is document your payment amount, date, and method of payment through Freebird Payment. Once this is done, a confirmation will be sent to the lender to validate that the transaction has taken place.

A Use-Case for Pigeon Loans

Let’s role play. You are someone who has $5,000 in 7% high interest student loan debt. Your friend has enough money in their savings accounts to pay off your loan. You can ask you friend to make a contract with you on Pigeon Loans for a $5,000, 2% loan. This saves you 4% interest on your $5,000 Student Loan. At the same time, your friend (the lender) will make more money on interest than they would have if they left that money in a high yield 0.50% savings account.

I could definitely see myself using Pigeon Loans in the future. In my opinion, it is a great tool for consolidating high interest debt. It is better to pay a friend of family than to pay a bank or student loan lender. I believe it is best to make a contract with a friend or family member who has a comfortable lifestyle and can afford to keep their money tied up in a contract.

Hyder A.

Hyder is the engineer and blogger behind Finance Throttle, a blog that helps you accelerate your net worth through personal finance. With a Master’s degree and 10+ years of experience in manufacturing, Hyder is well versed in the topics of engineering economics and financial studies helping him to invest in equipment and reduce manufacturing costs. Hyder is passionate about cars and earning money as he bought a Porsche at 21, became a landlord at 24, and paid off $40,000 in student loans at 25. Along with his wife, they are currently on track in paying off their $282,000 mortgage by 2026 (Only 7 years!)

This Post Has One Comment

  1. Jenna November 4, 2021

    This is a great article! Super insightful and I loved your use-case! Thanks so much for all the info. Keep up the good work!

Comments are closed.