Note: This is the English translated version of a blog post originally directed to our Brazilian community. If you speak Portuguese, check out our original post.
Hello fellow Brazilians!
I would like to use this post to explain what we do in BTCjam and how we can help the Brazilian people in this difficult time of the economy. Our mission is to provide affordable credit for people around the world. We believe that especially now with such high interest rates (with overdraft rates reaching 300% per year) we can indeed make a difference in personal finance and Brazilian families.
Before diving into how we work, just a brief intro on the company itself. BTCjam is a company based in San Francisco, California, founded in 2012 by the Brazilian Celso Pitta Cardoso (no relation to the former mayor of Sao Paulo!). We received two contributions from Venture Capitalists in Silicon Valley, including funds that invest in many unicorns companies such as Uber, Netflix, Dropbox and Lending Club, as well as Bitcoin companies like Coinbase and Xapo.
We have two keys to the success of our model: Bitcoin and our Credit Scoring algorithm. Bitcoin is important because it is the way we engage in over a hundred countries with lower cost and increased speed of transfer. Today, we serve loans in more than 120 countries and by only using bitcoin we have a lean cost structure, which translates into lower interest rates charged to those who make loans through us.
Do I need to know about Bitcoin?
You may wonder what is bitcoin and need to understand the subject to get a personal loan with us, right? You can rest assured, you do not have to be an expert, since we have partners around the world that help borrowers to convert bitcoins into Reais or your local currency simply.
And how is the interest rate?
In the United States, generally, those who pay their bills on time pay lower interest rates on loans. That means, if you pay your car loan on time each month, you will probably have a lower interest rate than your friend, that has late payments showing up month after month.This system is super fair and benefits those who pay their bills on time, unlike it is in Brazil where people complying with their obligations end up supporting the “deadbeats” because everyone pays the same interest rate. I’m sad to say we in Brazil, have the world’s highest interest rates – debt on credit cards can reach 400% a year (compared to less than 20% in the US, only for purposes of comparison).
To calculate the interest rate, we look at hundreds of factors such as salary and other traditional sources but mostly alternative sources such as data coming from Facebook, LinkedIn, Free Market, Gmail, etc. Based on this mountain of data we can calculate the probability of repayment of anyone in the world, provide a credit note (from A+ to D-), and then based on this credit rating, determine the appropriate interest rate. Our interest begins at 2.2% per month to A+ borrowers and on average are around 6% per month for most who make a loan with us.
Once you receive your credit rating, you are allowed to apply for a loan on the platform. This loan is published for worldwide lenders to analyze and decide whether to fund it or not. Perhaps you’ve heard of some crowdfunding platform like Kickante in Brazil or the US Kickstarter. Our operation is similar: people create loan applications that are funded by dozens of other people, each putting a little until it reaches the total amount requested.
Now that you already know in general how we work, we think it is worth knowing also how best to use our system. Following is a brief practical guide to help.
Practical Guide to how to apply for a loan on BTCjam:
1) Always use truthful data. We use advanced data verification techniques, and if you use false information we’ll find out and you will be penalized on your credit note or even be banned from the platform. This also applies to those who create accounts on other services only to use them for the purposes of registration. So if you’ve never used LinkedIn for example, you should not create an account just to provide it to us. It’s better just to not have such an account linked (no pun intended!).
2) Connect the maximum possible accounts as they have tangible impact on the rate you pay, ie your interest.
3) Ask for references – acquaintances write about you on the site. Tip: This also helps you potentially lower the interest rate.
4) Once you receive your credit rate, create your loan application and describe it in detail: reporting to need money (eg pay off an overdraft), how you will afford to pay the loan back and contingency plan if everything goes wrong (have some asset that you can quickly sell to get money to pay the lenders who funded your request). TIP: lists with details, usually receive faster investment.
5) Reply comments from investors quickly so that they are safer to invest in you.TIP: we notify you via email when commenting on his list.
These are basic tips for you to get your loan funded quickly through our platform. We are very happy to finally offer Brazilians a fairer approach – the way people in developed countries get their loans.
Welcome to the club! (and if you are not a member yet, check your rate now)