Peer to Peer Lending and Crowdfunding is no stranger to innovation. The entire concept is based on a revolutionary breakthrough in technology that puts borrowers and lenders directly together on a platform where they can make and receive loans at more competitive rates than those typically provided by the old school traditional lending gatekeepers. Daric is a relatively new player in the industry that has pioneered another ground-breaking platform for the next generation of lending online. With their setup, they have wrestled with and overcome complex problems with machine learning, software engineering, and big data in order to come to better grips with the risks of credit. They manage this process of underwriting and putting together investors and borrowers using powerful algorithms in their proprietary software. We love the elegant interface that both simplifies decision-making and helps borrowers and investors alike to save their valuable time.
Daric Intro & Background
The people behind Daric created the system and platform as a means of providing cutting-edged Peer to Peer Lending for both small businesses and individuals using a marketplace setup. The financing for these loans is offered by third party investors who participate in the platform just as the borrowers do. The system that matches these parties up is fully automated, saving both money and time this way. The company claims that its founders and management possess a wide variety of useful backgrounds in the areas of engineering, math, and science. They have financial backing from some impressive executives in technology and finance, such as the former CEO of Wells Fargo.
As Daric says about itself, they are the next generation of financial software that combines the brightest minds in finance and technology in order to deliver web client solutions that are cloud based for performance management, risk analysis, and targeted acquisition. What does all of this mean to you? It translates in layman's terms to better, safer opportunities in which you can invest with confidence. Daric is so very confident in and proud of this ground-breaking technology on which they have built the platform that they are licensing it out to financial institutions and banks in need of help with these various complex problems and issues surrounding credit, risk management, and lending solutions.
Daric Founder and Management Team
One thing that makes us a little uncomfortable about Daric is that despite all of their amazing and coveted technology in processes and algorithms, they are very non-transparent and even shrouded in secrecy with important information about themselves. A good example of this is in the identities of their founders and management team. There were no readily available references to a single manager, board member, or employee on their website. With an exhaustive search on various other unrelated management sites, we learned that their primary management is:
CEO Greg Ryan
Chief Development Officer and VP of Design Cooper Dawson
CTO Vasant Ramachandran
No information on their backgrounds or specific areas of responsibility at the company was provided by the Daric website or the third party management sites that mentioned them.
Daric is making loans to both small businesses and individuals. Thanks to their impressive and powerful software and platform, they require no documentation uploaded with applications in the majority of underwriting cases. Businesses who want to borrow from them are typically:
- Somewhat established businesses (operating for at least 3 years) with poor credit
- Business that have smaller borrowing needs
- Businesses that possess no collateral
This works out well for business with no collateral, as these are unsecured and fixed rate loans whose APR will never go up during the course of the specific loan. Daric also promises that there are no “gotcha fees” lurking in the system or application process. Small business are able to borrow as much as $50,000 for rates starting at 6.78%. This is sufficient to pay for office expansions and renovations or equipment purchases.
Individual borrowers may borrow money in a single loan up to $35,000, or after six months of solid repayment history with a second loan that brings the total borrowed to no more than $50,000 between the two loans. We love the fact that borrowers have literally nothing to lose in applying since the platform never charges any applicant a fee until they are approved and have received their funds.
As far as how long it takes to be approved for, funded, and receive the money, the funds are typically processed and disbursed in only a few days. Daric is quick to admit that it might be as long as 14 days before the money is disbursed in certain cases. If an investor offers at least 60% of the funding requested within 14 days, the borrower has the choice to accept the lower amount or walk away scott free. Otherwise, after 14 days, Daric will cancel the loans that are unfunded.
How Daric Works
Applying for loans is so simple thanks to Daric's revolutionary platform. It only needs borrowers to set up their account and provide their bank account routing number and account number before they fill in a short application applying for the loan itself. Generally no additional documentation or information is needed. After the underwriters approve the loan, they post it up on the platform so that investors can review it and choose whether they wish to provide the funds or not. As soon as an agreeing investor signs off on the loan, the funds are direct deposited to the borrower's particular bank account.
Without a doubt, Daric has an efficient, effective, and straightforward system, particularly when compared to some of its unsecured P2P lending rivals. Repayment is similarly easy, as they will simply put through ACH withdrawals automatically on that same bank account each month until the principal and interest are repaid under the terms agreed upon by the borrower. Prepayment is not offered by the platform at this time (at least as far as we can tell).
Regarding the requirements, the terms of the loans Daric facilitates are only 36 months or 60 months in length. If a loan is a smaller dollar amount, then it will default to the 3 year repayment schedule automatically. In order to qualify, borrowers must possess a personal credit score of at least 660, along with an under 35% debt to income ratio. Businesses must have functioned for minimally three years as well. Borrowers may not show any bankruptcies during the prior seven years, their credit cards can not be maxed, they may not have any charge-offs or medical collections (in the prior 12 months), and they may not show any delinquencies on any credit accounts.
- Proprietary Grading System – They determine rates utilizing a somewhat complicated grading system that doles out a Loan Grade of A1 through G5 to individual borrowers based upon the financial history of the borrower and the loans' size. Any business, or person for that matter, who is assigned an A1 grade rating will pay rates that are among the lowest available today at just over 6%.
- Online APR Estimator – Borrowers are able to punch in some information to get an estimated APR for their loan in advance of applying. The estimator does not consider the borrower's actual credit score.
- Exceptional Returns for Investors – Investors with Daric are able to realize excellent returns that average between 9% and 10% on principal.
- Regular Non-Accredited Investors Are Eligible – Daric is most unusual in that it registered with the SEC to be able to accept investments from non-accredited investors well ahead of the changes being brought on by the implementation of the JOBS Act Title IV that comes into play in early 2016.
- Simple and easy to use interface – Their platform, algorithms, and solutions are so cutting-edged that they even license them out to banks to provide solutions to some of the most challenging and complicated problems with credit, borrower profiling, and risk management.
Daric is based in Redwood City, California which is famous as the former home of Lending Club. Their corporate headquarters is found at 805 Veterans Blvd, Redwood City, CA 94063. This coincidental home-basing in the 800 pound gorilla's former stomping grounds sure smacks of hero worship to us.
Daric Interface Screenshots
Daric spends considerable time talking about their data safety and privacy practices, so obviously this is an area of concern and importance for them. They treat all of their customer data as if it were highly confidential. There are only a few points of access to financial and personal information on their systems, and all of them are closely guarded with encrypted passwords. Data security is also enforced with a combination of firewalls and hardened operating system-powered servers, each of which is protected in a secured facility. Only highly placed managers are allowed to access either the electronic or the physical systems. All of their servers are also equipped with the ubiquitous SSL certificate 128 bit encryption technology that ensures all data coming into and going out from the website is encrypted.
Lastly they put their systems through a variety of security audits from time to time to ensure that all of your data and information is both secure and protected. Any bank account information is kept in a subsidiary of VISAs, Authorize.net, where it is highly secured in their information management systems. For a company that lacks transparency in some respects, we found their safety and security protocols to be top notch.
Daric Complaints and Ratings
Daric's operations are mysterious enough that they do not have a file with the Better Business Bureau, which includes any ratings provided by BBB or any other of the online rating companies, for that matter. We find this strange for a company that is so very proud of its technological wonders it has developed. It may be unsettling or even unnerving to investors too.
Daric Customer Support
They give out two phone numbers and three email addresses on their contact page. Daric also provides a contact form. Even though there is no live chat service at this time, it is still overkill. Their FAQ section is somewhat helpful but not exhaustive. While this appears to be better than average customer support in this P2P Lending space, a paradox with Daric once again emerges as there are a number of reviews on the Internet complaining about their poor customer service levels.
Daric Costs & Fees
Origination fees are the main ones that borrowers have to consider with Daric. These range as high as 5%. This is fairly standard in the Peer to Peer Lending space, but there are rivals out there who boast cheaper costs. As far as “sin fees,” any payments that fail earn a $15 Unsuccessful Payment Fee. Borrowers who are late have an unusual 15-day grace period with Daric. Once the payment is considered to be late on the 16th of the month, then a Late Payment Fee will be assessed that is the larger of either $15 or a 5% surcharge of the late payment. Processing a physical check also costs a $15 fee.
Final Words on Daric
We find Daric to be a study in contrasts. Their platform technology is world-class and industry leading, but you can not find basic information on it like the names of their founders and board of directors. They offer several customer care phone numbers, emails, and a contact form, yet members have complained that their customer service is lacking. They are licensing out their proprietary platform software to banks, yet the Better Business Bureau does not even know that Daric exists. They offer extremely competitive interest rates to small business and personal consumer borrowers, yet it is difficult to learn how much they pay investors as interest for funding the various loans. The technology of the company is the stuff of legends, yet borrowers often must wait 14 long days to receive their loan disbursements. Non-accredited investors are able to participate, yet no one can figure out what the minimum level of initial investments are. All of this is to say, we suggest that you perform your due diligence on the company, such as you are able to, before you commit your hard-earned investment dollars to the platform. We would hope that you would do this with any platform in the P2P Lending and Crowdfunding industry.
- The loans are available in choice of 36 months or 60 months terms. Smaller loans only come in 36 month terms.
- Borrowers may be able to receive partial funding on their loans if the full loan is not funded by any investors. So long as 60% of the funding is granted, this option applies.
- Borrowers receive the 15 day grace period after the first of the month due date before being charged any late fees.
- The site lacks some basic information about its operations, company, and board, and this may scare away potentially interested investors.
- The loan grading system makes it practically impossible to figure out how much your loan APR will cost without applying first, since you can not know your loan grade until after you apply and are accepted into their platform.
Daric is an unsecured personal loan marketplace that is also a strange paradox. Their platform technology is world-class and industry leading, but you can not find basic company information on it. They offer several avenues for customer support, yet members have complained that their customer service is lacking. They are licensing out their proprietary platform software, yet the Better Business Bureau does not know Daric. They offer extremely competitive interest rates to borrowers, yet it is difficult to find out how much they pay investors as interest. The technology of the company is the stuff of legends, yet borrowers often must wait 14 days to receive loan disbursements. Non-accredited investors are able to participate, yet no one knows the minimum initial investments. If you can get past these concerns, then this is a terrific platform.