As Prosper Lending Review points out, Pertuity Direct has not issued a press release since March (when they announced that they had funded $500,000 in loans), and hasn’t made a blog post since May. P2P Lending News contacted Pertuity Direct requesting an interview in early July, and received no response.

This apparent shutdown comes with no forewarning to Pertuity Direct members. The web site is still active and seems functional, although no new borrower stories have been posted since May 12. Users can still register, but borrowers attempting to sign up from any state (including Pertuity’s home state of Pennsylvania) are told “We currently do not offer loans in your state”.

Investors hoping to sign up through the National Retail Fund’s web site are also roadblocked with the following message:

We’ve reached out to Pertuity Direct for comment on these reports, and will add an update when more information exists.

Related posts:

1. Pertuity Direct Launches Mutual Fund-like P2P Lending
2. Pertuity Direct Lends $500K in First Two Months
3. Lending Club and Pertuity Direct Seek Affiliates

Here are five reasons a personal loan from a peer-to-peer lending company are better than a credit card loan…

1. P2P loans have a fixed interest rate.

One of the big changes that goes into effect today is that credit card companies now have to give at least 45 days notice before changing interest rates or fees on your credit card. That’s a good improvement over the previous 15-day warning, but why bother with variable-rate loans in the first place?

Loans from social lending companies (Prosper, Lending Club, Pertuity Direct) are fixed-rate loans. You got your loan for 12.50%? Congratulations. You’ll never need to remember another number again. No need to look up prime or LIBOR, and no need to check your mailbox for a notice of rate change, because your P2P loan’s rate is fixed until you pay it off.

2. P2P loans have a predictable, fixed payment schedule.

Another new reform taking effect today is that credit card companies must bill at least 21 days in advance of payment. Whether this law passed or not, chances are your credit card bill arrives at roughly the same time of month. But what does vary is the payment amount. Unless you monitor your spending like a hawk (using Mint, Wesabe, or Geezeo), your monthly bill is probably a surprise, and never the same from month to month.

With a loan from a P2P lender, your monthly payment is fixed. It’s due on the same day every month, and the amount due never changes. Unless you miss a payment or incur a fee (which P2P lenders still charge if you’re late), your payment never goes up. This makes budgeting your debt much easier, and improves the chances of paying off your debt once and for all.

3. P2P loans are fully amortized

I wish “amortized” weren’t such a scary-looking word. It just means “evenly divided over a period of time”. If you get a 3-year loan from Lending Club, payments are fully divided (or amortized) over three years. That means you pay down your loan evenly, with no surprise payments in-between, and at the end of three years, you’re done! Your debt is paid in full.

Credit cards, on the other hand, take your balance, evenly divide (or amortize) it over 40 years (yes, I said 40 years!), and ask you for that amount as your minimum monthly payment. That means that if you have a balance of $5,000 on your 15% interest Visa card, never charge anything on that card again, and only make the minimum payment of $62.66 each month, you won’t pay it off for 40 years. And you’ll pay $25,077 in interest alone!

4. You’ll never miss a payment

Not that they’re trying to make you miss a payment, but credit card companies don’t make it that easy to pay your balance online each month. For my Chase Visa, I can either pay the minimum payment or the full balance, but they don’t set that up as a default option. And I only get my bill in the mail – don’t they know that I manage my life with my inbox?

From a P2P lender, your monthly payments are fully automated, and you get an email in advance so you can make sure your account has enough cash. Welcome to the future.

5. You’re paying actual people, not a faceless corporation

If the lower rates, fixed interest rate, regular montly payment, or automated payments of a P2P loan didn’t do it for you, then do it for your neighbor. Sure, banks use your neighbor’s cash to make you a loan, but on the 15% interest you’re paying, your neighbor might get 2%. Through a P2P lender, you’ll have a lower interest rate (like 12%), and your neighbor will recover 10% of that.

A lot of P2P lending companies like to claim that they are “cutting out the middleman” (and let’s be honest, what business doesn’t like to say that?), but in reality, they’re just playing a more efficient middleman. Just like Netflix destroyed Blockbuster’s business by not opening brick-and-mortar video shops, P2P lenders are undercutting banks’ rates through slimmer operations and better technology.

So should you toss your credit cards?

No, for goodness sake, don’t get rid of your credit cards. You’ll still need them to buy things – you can’t step up to the checkout at the Piggly Wiggly and ask if they take Prosper. P2P lending isn’t there yet, but you still need to buy things, and cash is so 20th century. Take advantage of the credit card companies’ largesse in fronting you money on your purchases, and use the time before your bill is due to get a loan from your neighbors through a P2P lender.

You also don’t want to close your credit card accounts because doing so can lower your credit score. Closing an account lowers your available credit balance, which is one of the key metrics that credit companies use to calculate your score.

So keep your credit cards, just use them more wisely. If you can’t pay your bill in full each month, go over to Prosper, Lending Club, or Pertuity Direct, get yourself a fixed-rate, fully-amortizing loan, and use that to pay off your credit card bill. And once you’ve done that, pay off your loan, go on a credit card diet, and live happily ever after free of debt.

Related posts:

1. Lending Club Raises Rates, Prosper Pushes Auction Model
2. Lending Club Posts Strong 1H 2009, Loans Growing 7% Per Month
3. Lending Club Issues $50 Million in Loans

Other statistics provided include:

• 70% of interested users follow through to open an account
• The average FICO score is 740 for approved borrowers
• The average loan size is $9,800

How does this stack up against other P2P lending sites? Prosper, who launched to the public on Feb 6, 2006, had funded $1.8 million by Apr 6 (according to Prosper’s statistics page). Lending Club, who is probably a better comparison due to their credit quality requirements, launched to the public on Sep 13, 2007, and had funded $1.2 million by Nov 13 (according to LendingClubStats.com).

Granted, the financial world is quite different today than it was two or three years ago. Investors’ portfolios have been decimated, and would-be lenders are more risk-averse than ever. We wish Pertuity Direct the best, but they’ll need to come with bigger and bigger numbers if they really want to succeed in the peer lending space.

Related posts:

1. Pertuity Direct Launches Mutual Fund-like P2P Lending
2. Pertuity Direct Shuts Down Unexpectedly
3. Lending Club and Pertuity Direct Seek Affiliates

In the beginning, Lending Club had a simple pitch for members: bring your friends and we’ll give you $5. Your friend had to provide a name and email address, and you got $5. Easy money.

Probably a little too easy, because in late 2007, Lending Club changed the rules of their referral program to reward you and your friend $25 if your friend submitted a loan application, or became a lender ($50 if they transferred more than $1,000).

After re-opening their site late last year, Lending Club switched from a home-brewed program to an outsourced program with Commission Junction, and started paying affiliates $35 to $40 per loan application.

Now Lending Club seems to have a new program for existing members that looks a lot like an Amway multi-level marketing scheme. Just invite your friends, and earn $25 when they borrow. Then they invite their friends, and you still earn $15. Then the friends of your friends’ friends join, and you earn $10. In their example, if you invite 5 friends, and they invite 5 friends, and those people invite 5 friends, you earn $1,750. On the lender side, Lending Club pays $50 per new lender. It’s unclear whether they require a minimum amount to be committed, although they must.

Lastly, Lending Club has added a feel-good twist, offering referrers the opportunity to donate their earnings to the charity of their choice. The current list of charities includes  the United Way, the American Red Cross, the American Cancer Society, The Nature Conservancy, Habitat for Humanity, the World Wildlife Fund, and Doctors Without Borders.

Pertuity Direct just recently launched their affiliate program, and has a payment structure similar to an earlier Lending Club setup: $35 for each approved borrower application ($40 if >10 per month), and $50 for each new lender application ($60 if >10 per month). The program is set up through Commission Junction.

Since it’s not a true peer to peer lending site (lenders are basically investing in a mutual fund of borrower loans; not choosing borrowers directly or setting rates), Pertuity Direct is probably using Commission Junction because they don’t already have the infrastructure to support payments. CJ is an expensive proposition for advertisers, though. The maintenance fees can eat up between 20-30% of the program’s cost, so if you can roll your own, you can save a lot of money (or pay it out to the publishers). We’re eager to see how these marketing models evolve over time.

Related posts:

1. Pertuity Direct Launches Mutual Fund-like P2P Lending
2. Pertuity Direct Shuts Down Unexpectedly
3. Pertuity Direct Lends $500K in First Two Months

Pertuity Direct’s tagline is “mutually responsible banking”, and the “mutual” part of that tagline hints at their method. Rather than having lenders choose the borrowers they wish to finance, lenders invest in an SEC-compliant mutual fund, and Pertuity Direct chooses the borrowers who get funded.

Loans are available to borrowers whose credit score is 660 or higher. The rate currently advertised on the home page is 9.6% APR, and the full range of interest rates offered is from 8.9% to 17.9%, although there are no specific details on how rates are set. If approved for a loan, borrowers pay a 1-2% origination fee (depending on their credit score), and if they go late, borrowers will pay failed payment and late payment fees.

On the lending side, the minimum investment is $1,000, and lenders are investing in one of two mutual funds, which have estimated fees of 3.17%. To add a human element to the process, lenders can also contribute Pertuity Bucks (which are free) to a borrower’s loan, reducing the balance that the borrower owes.

From the company’s perspective, this provides the following advantages to their customers over existing P2P lending models:

• For borrowers, there is complete privacy. Pertuity doesn’t require the public posting of personal credit information or any other information about the borrower’s loan.
• For lenders, there’s no choosing of loans. An investor has the choice of two mutual funds (organized by National Retail Fund), and that’s it.

Pertuity Direct’s model is a big paradigm shift from what Zopa, Prosper, and Lending Club have done in the past. The mutual fund route lets Pertuity Direct avoid the regulatory pitfalls that have plagued the other sites, but with minimums of $1,000 and annual fees of 3.17%, it will be hard to attract lenders. On the borrowing side, things should be fine if Pertuity can accruately gauge the risk of their borrowers. We look forward to seeing how things progress for this innovative company.

Related posts:

1. Lending Club and Pertuity Direct Seek Affiliates
2. Pertuity Direct Shuts Down Unexpectedly
3. Pertuity Direct Lends $500K in First Two Months