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ZOPA - Anyone tried this
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rlc_2
Posts: 55 Forumite
Hi there,
Has anyone here tried using Zopa - I'm thinking of a (very) small investment.
Many thanks
Has anyone here tried using Zopa - I'm thinking of a (very) small investment.
Many thanks
0
Comments
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I checked the website.
ZOPA it would appear require investors on the promise of exceedingly high returns - 8.4% after costs.
The return is generated from small investors lending to borrowers.
POINTS;
1) Anyone borrowing money here will be paying high rates well over 10%, and what sorts of people pay high rates???????? People who are high risk - sub prime
2) Seems a high return for no effort on my part. At the same time I am attracted and repelled.
3) The economy is entering choppy waters
4) There will Im sure be detailed T & Cs that I wont have a cat in hells chance of comprehending
5) Safety is the big theme, but as we know in the light of Lehmans, Bear Sterns, N Rock, AIG (the worlds largest co), safety is a very broad concept0 -
But.... Im quite interested actualy in perhaps investing some rent income into this0
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Thinking about it though, it isn't a great return when you factor in the risks as we go into tougher economic times.
£20,000 invested at 8.4% is £1680 BEFORE TAX per annum. Not a lot for a relatively high risk.
Most people would be better paying down thier mortgage which is equivolent to a return of about the same given such payments aren't taxed.0 -
8.4% gross is 6.72% net with 20% tax.
I would say its more worthwhile than most mortgages...0 -
Thanks for your help people - I'm going to chuck in a couple of hundred just to see how the mechanics of the site work. Looking at it I do notice a couple of things:-
- You can limit your lending to £10 per borrower
- All borrowers are categorised into A, B and C risk bands although I'm not sure what this equates to in the real world.
- You can see a description of the borrower for what it's worth.
I'll let you know how I get on.0 -
Hi,
I have been lending at ZOPA for well over a year now. I have lent about 10k so far (including interest and repayments). I would comment much of the information above is just wrong.
Given that you can lend small amounts (min. GBP10) to lots of separate lenders, you can diversify your risk. To date, the default rates have been very low. I think it is reasonable to expect that this will increase in light of current events. Rates are increasing accordingly.
http://uk.zopa.com/ZopaWeb/public/lending/why-its-safe.html
On the ZOPA markets, the borrowers are credit checked very stringently. I believe ZOPA market borrowers are in the top quartile credit wise - the complete opposite of sub-prime!
There is another market called ZOPA listings, where lenders bid on a borrowers "offer". Generally, many of these borrowers tend to be less creditworthy. However, the lending rates are much higher to boot (15%+ is quite average recently).
The returns I have got on ZOPA beat the interest on my mortgage by a significant factor. I like to think of ZOPA as half way house between S&S and normal savings.
Finally, it is quite fun!In case you hadn't already worked it out - the entire global financial system is predicated on the assumption that you're an idiot:cool:0 -
What default rate have you had ?0
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Have you considered Halifax International's regular saver account, that pays 10%
I am convinced people don't understand regular savings accounts. There was yet another complaint in Times Money a few weeks ago from a lady who thought she would be getting the headline rate! There are a few banks/bldg societies doing 7%+ fixed on bonds for one year - Kapthing Edge is one.0 -
I have had £300 lent out for about 2 years now. I have never had a bad debt out of about 35 borrowers. They are very stringent on their credit checks and I think borrowers feel a bit more obliged not to default when they realise they are borrowing from real people rather than banks. The rates have increased a lot in the last few months, reflecting the general loan market.
The reason I haven't invested more is that there is no mechanism to get your money back earlier, you have to wait for the borrowers to repay the loan over the term. This is the one thing I think Zopa could improve on by having a market for second hand loans where lenders could 'sell' existing loans to people wanting to invest.
The website has answers to all the questions you can think of either through the faq section or on the forums.0
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