P2P loans from Zopa

CoogarUK

Locoblade wrote: »

Ive had a loan with Zopa for about 2.5 years now and would certainly recommend them if the rates are still competitive. Its very flexible if required (can overpay / repay entirely with no penalty at any point)

I imagine you took out your loan prior to Zopa introducing its standard £94.25 application fee, which I expect will (or should) discourage borrowers from repaying their loan early, particularly if it was for a low amount (APR will likely go sky high).

TechnoBadger

CoogarUK wrote: »

I imagine you took out your loan prior to Zopa introducing its standard £94.25 application fee, which I expect will (or should) discourage borrowers from repaying their loan early, particularly if it was for a low amount (APR will likely go sky high).

But the fee is included in the APR quoted to prospective borrowers! And as Zopa lenders rates are low at the moment there are good deals to be had anyway IMHO.

Of course it's a good idea to pay your loan back early if you want to - indeed, as Zopa "market" loans are only quoted for 36 or 60 months, borrowers can discuss alternative repayments to, say, pay off a loan in 24 or 48 months. Or simply make lump sum payments to reduce their monthly direct debit.

CoogarUK

TechnoBadger wrote: »

But the fee is included in the APR quoted to prospective borrowers!

Yes, calculated on the basis that the loan will not be repaid early!

Why do you think Payday loans and the like have to quote such high APRs?

LilacPixie

I had a look at them recently, we were considering some home improvments IE new bathroom.

The interest rate appears to be favorable for lower value loans in comparison to what my bank, RBS, were offering. I,however, did not like the choice of 36 or 60 months of a repayment period as I was looking at a much shorter term of around 12 months.

I know that you can pay off sooner with no penalty but when you figure in the application fee the numbers did not stack up for us.

CoogarUK

LilacPixie wrote: »

I,however, did not like the choice of 36 or 60 months of a repayment period as I was looking at a much shorter term of around 12 months.

Interesting you should say that, as many of Zopa's lenders feel the same. In fact, there was a bit of an uproar when Zopa removed the 12, 24 & 48 month markets from its offering.

Those periods were withdrawn at around about the same time as Zopa replaced the 0.5% borrowers fee with the present £94.25 standard application fee.

Co-incidence? I think not, but then I'm probably in the minority there. At certain times I feel it is better to be in the minority :cool:

TechnoBadger

After an interview with Zopa's CEO on Radio 4's Today programme this morning, I notice that most of the new members are lenders rather than borrowers. Driving down the rates further no doubt!

They'll apparently be on Five's news at 5pm today too.

TechnoBadger

CoogarUK wrote: »

Co-incidence? I think not

I think not either. Because of their business model Zopa need to charge a fee - otherwise they won't be there for their members. APRs for 12 month loans would have looked high, though nowhere near the PayDay rates, but certainly over 10%. It's not an "application fee" as such, as it's only charged (actually added to the loan) once the borrower accepts the terms and the money. Not when you apply. The effect of the fee is shown and included in the APR from the start as you'd hope and expect.

TechnoBadger

New article today:

http://www.thisismoney.co.uk/credit-and-loans/article.html?in_article_id=466969&in_page_id=9&position=moretopstories

And a TV news item:

http://news.five.tv/news.php?news=1477 (click on "By-pass The Banks")

Hope they help to explain.

00ec25

TechnoBadger wrote: »

After an interview with Zopa's CEO on Radio 4's Today programme this morning, I notice that most of the new members are lenders rather than borrowers. Driving down the rates further no doubt!

I am one of them having joined on Friday! (Sadly I forgot to check on here to see what the forum thinks of them so also missed out on the recommend a friend rebate)

They have already allocated a resaonable chunk of my money at rates between 9.4% to 12.7% gross (before deducting the 1% fee) so, pending any repayment defaults, I am very happy as I took the funds from my "savings" account paying under 3% gross.

One issue though is any money gets next to nothing when residing with them before allocation so I will recall it if not loaned out soon, as even 3% is better than their holding rate.