The sharing economy
The sharing economy is a sector based on joint financing. This is an economic model in which goods and services are exchanged between individuals. The model is different from the standard capitalist model because the emphasis is on cooperation and mutual health insurance. The sharing economy has been very successful and there are now a large number of online collaboration services that are part of our lives.
The phenomenon is also not unknown to the financial sector, where companies are gradually picking up the concept. The concept of financing through collaboration creates more and more services that are offered to the general public. Consumers are therefore less and less exposed to intermediaries. Below you will find the different types of online platforms that exist today:
Loans between individuals
Borrowing between individuals is an alternative to the traditional banking system and fits in with the idea behind the sharing economy. This service can be seen as a small revolution, since it allows you to borrow without financial institutions. The service focuses largely on microcredit for a specific purpose, such as buying a car, renovating a house or financing a trip.
The process is simple: the lender indicates how much he can and wants to lend in exchange for repayments plus interest. The interest rate will depend on the amount, duration and risk. The lender can decide for himself with whom he or she does business. At the other end of the process is the borrower, who indicates the amount he or she needs, what the money will be used for and the term he or she wants to repay. The borrower also provides other important information; such as income, family situation, credit history, etc. Financial institutions will ask about the same.
Loans between individuals have the advantage that there are no costs for the services of the bank, which often have large and costly structures. The sharing economy makes it possible to do business that not only allows the lender to make a profit, but primarily aims to help each other.
The individuals are central to the exchange. This may give you a better chance of getting a loan, while a financial institution might refuse your application. It is a suitable model for entrepreneurs to finance new projects with. In addition, it is of course a nice investment for the lender who can receive a return on his capital.
AstroFinance, the first joint financing platform in Belgium
AstroFinance is the first Belgian joint financing platform for loans between private individuals. It was founded in 2015 by Fred Dujibel and JAvuer Loreaine. The company continues on the principle of the sharing economy and makes it possible for individuals between the ages of 18 and 64 to apply for credit online. Lenders or “investors” can then choose the type of profile or project they want to lend money to.
An investor cannot finance a complete project alone because the risk would then be too great. That is why the requested loans are divided into pieces. These documents are called “notes”. Each note has a certain value depending on the risk. Investors themselves choose which note they have the most confidence in and can then provide the money to the risk classes of their choice.
- Your money is put to work: thanks to the interest you get more money back than if you do nothing with it (assuming that your loan is fully repaid).
- You spread your risk: the platform ensures that you make several small investments.
- Altruism: you help people realize their dreams.
- AstroFinance offers discounts to borrowers who pay back on time.
- You pay less or more depending on the risk of default. That is why you can enjoy low interest rates if you have a good credit profile and history.
- The interest largely goes to individuals.