how does lending work?

[gentleman78]

Hello guys i am new to the forum i am just courious into how the whole lending thing work, i have seen peope lending and borrowing without collateral ?
anyone can explain how the whole thing work?

thanks a lot

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[Jhanzo]

Seriously?  You're asking how lending works?

It's just the same as always, you give something to someone and it will be returned later.  You can ask for interest (for profit) and/or collateral (for security) if you want.
People who lends without collateral either trust the borrower enough (because they have good reputation maybe) or just don't care about their money.

[FrilledShark]

It's very simple. You transfer collateral worth 120% of the amount you want to lend
Vod made an excellent post about collateral. I have quoted it below.

If you want a collateral free you, you put your trust as "collateral". 9 out of 10 loans without collateral requires you to have either green trust or past lending experience. You got neither, so you should be too optimistic getting a collateral free loan.

When that is said, you are more then welcome to get a loan with collateral.

What is considered collateral?

Collateral is something that can easily be resold to cover the loan value plus interest should the loaner default on the loan.

- The best collateral is another crypto-currency, such as Litecoin (also written as LTC).  Coins must be moderately traded on multiple exchanges.
- Some digital wares such as domain names can be considered as long as the user cannot recover it.
- Small valuable items that can be shipped though the mail - i.e. gold, silver, iphones, etc.
- Large items, such as a motorcycle or guitar can be used if you live close to the person giving you the loan.  Try localbitcoins.com

What is not considered collateral?

- Items they want to sell.  They don't want it back, so they will default.  It's scammy unethical behavior and will lead to negative trust.  Check their recent posts!
- Items not in hand.  Don't trust a user that promises to give you something *when* they default!  Tracking numbers only show something has been mailed - it could be an empty box.
- Future income.  You can prove you'll make xx coins in the next few days, but nothing forces you to send those coins to pay your debt.
- Identification.  So what if they can prove who they are.  Are you going to spend more money and time taking them to court on untested legal grounds?  You'll probably just walk away, like everyone does.  ID is useless.
- Games codes or similar.  To verify the collateral you need to use the code, which destroys the collateral.  Consider this a purchase, not a loan.  (Post in Digital Goods instead)
- Most new alt-coins or alt-coins that trade for satoshis are not good collateral as they can become worthless overnight.
- Paypal should never be used - they are anti-bitcoin and will rule against you 100% of the time.  Escrow can't even help, as paypal charge backs can come over 6 months later!
- Most valuable online accounts can easily be recovered by social engineering (the user contacting support to say they were hacked, and regain control of the account)  Examples:  Steam

[gentleman78]

Seriously?  You're asking how lending works?

It's just the same as always, you lent something to someone and it will be returned later.  You can ask for interest and/or collateral if you want.
People who lends without collateral either trust the borrower enough (because they have good reputation maybe) or just don't care about their money.

thanks for replying the question may sound a bit silly but i have seen people lending with no collateral to new user and also selling their account this is very new to me. but i appreacite that you reply as well as other users

[mindrust]

Money lending is the main reason that today's banking system still exists. Because, money today has more value than money later. If you are going to receive your money later, you ask for more money from the borrower. That's the basics. This can be executed in bitcoin system too. Just use a valid escrow service so you don't get scammed.

[FrilledShark]

Seriously?  You're asking how lending works?

It's just the same as always, you lent something to someone and it will be returned later.  You can ask for interest and/or collateral if you want.
People who lends without collateral either trust the borrower enough (because they have good reputation maybe) or just don't care about their money.

thanks for replying the question may sound a bit silly but i have seen people lending with no collateral to new user and also selling their account this is very new to me. but i appreacite that you reply as well as other users

Would you be able to point us to the thread about the new user lending without collateral? Together we can find out how he/she got his/her loan without collateral.

[gentleman78]

Seriously?  You're asking how lending works?

It's just the same as always, you lent something to someone and it will be returned later.  You can ask for interest and/or collateral if you want.
People who lends without collateral either trust the borrower enough (because they have good reputation maybe) or just don't care about their money.

thanks for replying the question may sound a bit silly but i have seen people lending with no collateral to new user and also selling their account this is very new to me. but i appreacite that you reply as well as other users

Would you be able to point us to the thread about the new user lending without collateral? Together we can find out how he/she got his/her loan without collateral.

actually it was you who lend him i believe. this is what i dont get

https://bitcointalk.org/index.php?topic=1607108.0

he offer his account as a collateral??  thanks again

[FrilledShark]

Seriously?  You're asking how lending works?

It's just the same as always, you lent something to someone and it will be returned later.  You can ask for interest and/or collateral if you want.
People who lends without collateral either trust the borrower enough (because they have good reputation maybe) or just don't care about their money.

thanks for replying the question may sound a bit silly but i have seen people lending with no collateral to new user and also selling their account this is very new to me. but i appreacite that you reply as well as other users

Would you be able to point us to the thread about the new user lending without collateral? Together we can find out how he/she got his/her loan without collateral.

actually it was you who lend him i believe. this is what i dont get

https://bitcointalk.org/index.php?topic=1607108.0

he offer his account as a collateral??  thanks again

Yes it was me.  
His account is worth more then 0.025 BTC and he got past lending experience. (As you can see on the trust page) (Found one more). If he would default on the loan anyway, he would be better off selling the account, as it is worth more then 0.025 BTC, which is why I believe the loan is safe.
He isn't a new user either. His account was created more then a year ago and he got +2000 posts.

Edit: Sorry. A few errors.
Edit 2: Agian, formatting.

[codehtcmail]

It's very simple. You transfer collateral worth 120% of the amount you want to lend
Vod made an excellent post about collateral. I have quoted it below.

If you want a collateral free you, you put your trust as "collateral". 9 out of 10 loans without collateral requires you to have either green trust or past lending experience. You got neither, so you should be too optimistic getting a collateral free loan.

When that is said, you are more then welcome to get a loan with collateral.

What is considered collateral?

Collateral is something that can easily be resold to cover the loan value plus interest should the loaner default on the loan.

- The best collateral is another crypto-currency, such as Litecoin (also written as LTC).  Coins must be moderately traded on multiple exchanges.
- Some digital wares such as domain names can be considered as long as the user cannot recover it.
- Small valuable items that can be shipped though the mail - i.e. gold, silver, iphones, etc.
- Large items, such as a motorcycle or guitar can be used if you live close to the person giving you the loan.  Try localbitcoins.com

What is not considered collateral?

- Items they want to sell.  They don't want it back, so they will default.  It's scammy unethical behavior and will lead to negative trust.  Check their recent posts!
- Items not in hand.  Don't trust a user that promises to give you something *when* they default!  Tracking numbers only show something has been mailed - it could be an empty box.
- Future income.  You can prove you'll make xx coins in the next few days, but nothing forces you to send those coins to pay your debt.
- Identification.  So what if they can prove who they are.  Are you going to spend more money and time taking them to court on untested legal grounds?  You'll probably just walk away, like everyone does.  ID is useless.
- Games codes or similar.  To verify the collateral you need to use the code, which destroys the collateral.  Consider this a purchase, not a loan.  (Post in Digital Goods instead)
- Most new alt-coins or alt-coins that trade for satoshis are not good collateral as they can become worthless overnight.
- Paypal should never be used - they are anti-bitcoin and will rule against you 100% of the time.  Escrow can't even help, as paypal charge backs can come over 6 months later!
- Most valuable online accounts can easily be recovered by social engineering (the user contacting support to say they were hacked, and regain control of the account)  Examples:  Steam

This covers how lending works, now you know.

[knightkon]

Now that you have been provided with some information on how lending works here, do yourself a favor, unless you have the proper collateral, do not ask for a loan.  There are to many newbies and other members who think just because they ask for a loan, they will get it here.  Not the case.  Good luck.

[bitcoin-shark]

the only way to do lending whitout collateral and be sure get it back is do it on poloniex