Zirtue Review – A Peer-to-Peer Lending App

The Federal Reserve estimates that Americans lend $184 billion dollars to friends and family members each year.  As you likely know, these loans can be awkward for both the borrower and lender when it comes time for repayment.  I’ve been the embarrassed borrower who completely forgot to repay someone, and I’ve been the lender who cringes at the thought of asking a friend to repay a seriously overdue loan.  We tested out Zirtue, a peer-to-peer lending app, to see if it would help take out some of the awkwardness for these loans.

What is Zirtue?

Zirtue is a mobile app that aims to formalize loans between friends and family in a lightweight streamlined manner.  The thought is that this will make both parties feel more comfortable with the personal loan.

You may be familiar with peer-to-peer marketplaces such as Lending Club and Funding Hero.  These marketplaces match a borrower with a creditor. The creditor is typically a bank or an anonymous individual on the platform who is looking to make money off of the interest payments.   Zirtue differs in that you can only match with people you know who are in your phone’s contact list, and the creditor makes little to no money off of the transaction. Note that Zirtue does not secure the loan so there is still an element of the honor system in these transactions; they aren’t going to go after the borrower for non-payment so there is still an element of the honor system / maintaining good relationships in the system.

One of Zirtue’s primary aims is to provide a viable alternative to payday loans.  While payday loans are sometimes a necessary evil, the annual percentage rates are an average of 391% while loans on Zirtue average 5% annual percentage rate (APR).  The app provides a structured process for the borrower to show friends and family that they are serious about repaying the loan.

How does Zirtue Work?

After downloading Zirtue from the Apple or Android store, the borrower and lender agree to the loan amount (anywhere from $20 to $10,000) and repayment terms in the app.  Repayments can be set up as a one-time lump payment or a recurring set of installment payments over a period of weeks/months with optional steps to include pictures of the bills to be paid with the loan.  The borrower and lender also connect their bank accounts directly to the app. Once these steps are completed, Zirtue facilitates the transfer of funds between bank accounts, and then it automatically initiates repayment based on the agreed terms.

Additional options are being added, where the lender can directly pay a bill for the borrower.  They currently only offer this with AT&T, and they are actively working to partner with additional companies.

Cost of the Service

Zirtue is free for lenders.  Borrowers are required to signup for a subscription plan that gives them an unlimited number of loans and the ability to cancel at any time.   Subscriptions range from $5.99 per month, to $15.99 per quarter, to $49.99 for a year.

Our Experience with Zirtue

I had an overall positive experience using the app to complete a loan and repayment. 

Positives

1. The user setup was very easy; my identity was verified right away, and I was easily able to connect my Bank of America account to the app.
2. The loan setup/completion process was equally straightforward.  Each screen contains different options for setup with easy to understand options.
3. Everything is automatic after the loan setup so I truly didn’t have to worry about the social awkwardness of asking for repayment of the loan.

Negatives

1. Use of Plaid to connect the platform and banks.  This keeps all of your bank information private from Zirtue (who has a strong privacy policy), but it does give Plaid the ability to scan transactions in your bank account.  Plaid is a large company with strong security measures, but it is something to be aware of if you have concerns about banking privacy. 
2. I would like to see a faster repayment option.  The shortest time frame is 3 months which seems a bit long for most loans.  This limitation is set by Apple and Google to avoid having payday loan providers in the app store.  However, you do have the ability to manually repay the loan earlier.