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Pertuity Direct Review


Pertuity Direct is a new social lending site where consumers can lend and borrow money directly without the involvement of a traditional bank. In this Pertuity Direct review, I’ll take a look at some of the features and explain how Pertuity compares to other social (or peer-to-peer) lending networks like Lending Club and Prosper.

About Pertuity Direct

Pertuity Direct is a social lending network registered with the U.S. Securities and Exchange Commission (SEC). Like other social lenders, Pertuity lets consumers make loans to others and earn a return on their money that’s better than most high yield savings accounts. Alternately, consumers can choose to borrow money with Pertuity and secure a personal loan at lower rates than with most credit cards and banks.

Borrowing with Pertuity

Pertuity Direct is best suited for borrowers with good credit. In fact, a minimum credit score of 660 is required to borrow from Pertuity. During our review of the Pertuity Direct social lending network, we also learned that unlike some other social lending sites, Pertuity handles the credit application process. At some other sites, a portion of your credit profile is available to lenders (not so with Pertuity). In addition to your credit score, Pertuity Direct will examine applicants’ credit history, debt-to-income ratio, and other factors.

If an applicant is approved as a borrower, Pertuity Direct will set the interest rate based upon the applicant’s credit profile and loan amount (loans are available between $1,000 and $25,000). Borrower interest rates range, at the time of this review, from 8.9% to 17.9%. Applicants may then decide whether to accept the loan terms.

Additional fees include a 1-2% closing fee (depending on credit), and a $15 fee for failed and late payments. There is a 1% rate discount for electronic funds transfer.

Lending with Pertuity Direct

With some social lending networks, lenders actually choose which borrower loans to invest in themselves. Pertuity is different. Pertuity takes its portfolio of borrower loans and offers it as a mutual fund (called the National Retail Fund).

In other words, Pertuity manages the risk, and you get the returns. This makes it simpler to get started as a lender, although it gives you less control over how much risk you want to take in exchange for expected returns. One major perk of Pertuity’s lending system, however, is that you can withdraw you money at any time. With other social lenders, you have to wait until your loans are repaid over a course of 36 months to collect your principal and interest.

Pertuity advertises that its portfolio contains loans with an average interest rate of 13.9%, an average balance of $9,300, and an average credit score of 740. The minimum to invest as a lender with Pertuity is just $250.

Pertuity Direct Review Summary

I’m a huge believer in social finance because it gives the power to make responsible lending and borrowing decisions to real people, not large banks. So I’m glad to see Pertuity grow as an important player in the social lending network. For borrowers, Pertuity Direct offers a very similar product as other social lending networks. The one difference is that Pertuity makes the credit decision regarding whether or not you’ll be approved and what your interest rate will be rather than a group of individual lenders.

For lenders, Pertuity provides the ability to invest in a mutual fund representing a portfolio of loans rather than individual loans. This will minimize lender’s losses but may also discourage some more aggressive lenders who want to swap higher risk for greater returns. Finally, Pertuity does give lenders the chance to withdraw money at any time rather than waiting for loans to mature.

Have you used Pertuity Direct? What did you think?

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

Comments

  1. As an early lender on both Prosper and Lending Club, I see new players like Loanio and Pertuity Direct bringing new concepts and ideas to the table. However, I like the control of choosing where I put my money, so having the ability to choose the loans is more important to me than the benefits of Pertuity’s mutual fund model brings.

    I’m going to stick with Lending Club for now. Prosper does not seem to come out of their quiet period, and my account there is not performing as well as Lending Club.