Zopa??

Any

Hi,:hello:

Recently someone mentioned Zopa (on different thread) as a possible borrowing option. I looked at their website and I am very intrigued by this idea of "normal people lending to normal people". Though I don't know whether it is sensible site, can I trust it and does anyone have any experience with them? Is it con or is it real?
I would like to know opionions on both sites - lending other people money and borrowing from them please.

Thank you
Any

1606pgs

Any wrote: »

.... I don't know whether it is sensible site...

A matter of opinion really, but I regard it as very sensible - lenders can get reasonable rates, as can borrowers compared to some Bank and Credit Card rates.

Any wrote: »

....can I trust it and does anyone have any experience with them?

As a lender of well over a years' experience I can recommend it - just don't get carried away offering at too low rates, especially on the "Listing" feature. I have made about 300 loans. About 50 of my early loans have now completed and been repaid satisfactorily. I have suffered only one "late payer", currently being pursued by Zopa (this is a better record than some lenders, I should warn you, but default rate is still very very low).

Any wrote: »

.... Is it con or is it real?

Certainly not a con, although some potential borrowers may be con-merchants - Zopa to date seems to have done a good job weeding them out.

Any wrote: »

.... and borrowing from them please.

No experience of borrowing I'm afraid.

Any wrote: »

... Zopa ... I looked at their website and I am very intrigued by this idea of "normal people lending to normal people".

Have you tried their forum - over a period of time you will get a good idea of people's views - there are frequently differing views appearing there.

If you are hoping to borrow, then please come along, I've got money waiting

Please note that Zopa only accepts borrowers from the upper levels of creditworthiness so many applicants for loans are disappointed, but lenders of course feel more secure.

Any

Thank you for that,
I am possibly looking at both - borrowing AND maybe later doing some lending to earn interest - or maybe the other way round. I still can't decide whether I can live without new car or not:-))

Do you know anything about how strict are they in credit rating? I have never been turned down on c/card (I keep changing 0% deals) or anything and I earn 22k. I wouldn't want the loan if the rate was higher then high street bank...

I did look a bit at their forums. What I understand there are "market" lendings and "listings". I understand that with listings the lender picks their own person they want to lend some money, but how does the "market" lending work? Do you just entrust the decision to Zopa managers or something?

I know, lots of questions, but if everything about this site is true, it is pretty cool and I would like to get involved.

Thank you

1606pgs

Any wrote: »

Thank you for that,
....Do you know anything about how strict are they in credit rating? ...

Not a lot, they are (understandably) secretive about it to avoid people playing the system. They do use Equifax. Their response to queries seems to be "suck it and see" - it's free unless you actually take up a loan.

Any wrote: »

...but how does the "market" lending work? Do you just entrust the decision to Zopa managers or something?

Yes, their underwriters decide the viability of the borrower and then split the loan across however many lenders it takes (Lenders can restrict amount to any one loan, frequently £10) to meet the loan.

Any wrote: »

...if everything about this site is true, it is pretty cool and I would like to get involved.

Take care - there is a lot of hype about this site - it's by no means perfect and has some drawbacks - for example money lent cannot be retrieved until the loan is finally repaid. On the other hand, for borrowers early repayment is fee-free. Holding account (i.e. where your money resides while awaiting borrowers) interest is low so you are much at the mercy of market demand and supply - Not long after I started lending I withdrew all funds as the market seemed dead and money wasn't going out at the sort of rate I required - it then picked up and I re-invested some money. Another snag is that once your money is allocated to a potential borrower it is no longer available to you - this is OK if the loan goes ahead obviously but a large percentage go into processing and then come out again because the borrower declines the loan (the rate may be too high) or because Zopa decline it as they complete their credit enquiries - this tying-up of funds can be a nuisance. Other Zopa members have a number of gripes also - see their forum for examples. It's a personal decision in the end.

Finally, Zopa's weekly newsletter to their members this week drew attention to this site (it's how I arrived), so there may be a deluge of Zopa-recommending posts, although I hope not because this could be counter-productive. I would rather see people interested from here posting on Zopa's forum.

jamesd

As I write this, the Zopa markets seem to be one of the most competitive places for people who want flexible loans.

Zopa can be good for lending and Zopa can be good for borrowing. When it's good for lending is generally speaking when it's bad for borrowing and vice-versa. So over the summer was good for lending and between the new year and end of tax year will probably be good for lending. Now is a good time for borrowing and a bad time for lending.

These effects happen because the rates achieved depend on the amount of money available for lending. Currently loan demand is low so there's a lot of money available and borrowers are getting very good rates for flexible loans (overpay as much as desired whenever you like without penalty).

Since it's a supply and demand market, if MSE was to mention Zopa, that would rapidly eliminate whatever rates made the mention worthwhile. There's about half a million Pounds of slack in the Zopa markets at the moment. With an average loan size of 4,000 that's 125 loans. The first 50 or so will get very good borrowing rates. After that the rates will gradually start to increase, becoming gradually less good for the borrowers and better for the lenders.

Zopa is usually good for those who have debt above 15% who can borrow from the markets there and for debt above 20% in listings and markets. But there may be better deals available elsewhere.

In the markets, Zopa's professional underwriters decide who can borrow. The initial filter accepts the top 50% of people and places them into the market that matches their credit record. At present something like 80% of applications are then declined by the underwriters. After being declined by the underwriters for the markets it's generally possible to seek a loan from listings, since the typical reason for being declined by the underwriters is affordability, while in the listings, the lenders decide whether the affordability is suitable and can choose to take more risk.

You don't meet the minimum 25,000 income requirement to borrow from the markets. You do seem to meet it for the listings. Your credit score seems likely to be fine and may well help you to get a low rate from listings, since good scores are relatively uncommon there.

Mentioning that the borrowing rates are currently low is contrary to my interests, since I'm considering borrowing. There's currently no realistic prospect of me lending because available rates are below those that interest me.

Any

Thanks JamesD,
I think 25k income requirement is very high. I might not have that income, but I do have £500 a month completely disposable - hence thinking of buying a car. If I went to listings, the rate would likely be about 9-10% - at least - then I might as well go with the rates car dealerships are offering on HP!
Thank you for telling me this, I think I will be better off going to the bank, as you can get a loan at 7.8% there.
xx

jamesd

Yes, it's a fairly high minimum income, as part of the risk reduction approaches used.

If you qualify for a bank loan and don't need flexible features that does look to be the best approach for you. It looks as though, since you don't meet the Zopa markets income, the Egg loan option would also be cheaper for you if you qualify for that and wanted flexibility.

Zopa only looks sensible for you if you don't qualify for one of those deals and need to use Zopa Listings. Doesn't seem likely when you're getting good credit card deals.

jamesd

Anyone thinking of using Zopa to pay for Christmas might note that January is a high demand time and that means that rates go up - they rose by about 6% at the start of last year compared to December.

Shop around for your best deals but if that turns out to be Zopa, best to get in before the new year. The rates there now are probably as low as they will be until May.

Best times to borrow at Zopa:

1. From the 3rd to 11th days of the month. Most people pay their loans off at the start of the month, so these are the days when the supply of money to lend is highest.
2. Wednesday and Thursday between 9:30PM and 11:00PM and 1AM to 10AM. Loan repayments are paid in in the mid evening and some applications that people didn't choose to pursue are cleared out between midnight and 1AM. So more money available at the times I suggest.
3. December, November, October in rough order, due to lower demand for loans, so more money available.

Worst times:
1. Weekends through Monday afternoon. Zopa doesn't reject applications on the weekends and it takes time to catch up on Monday, sometimes even taking into Tuesday. So less money available on weekends, particularly on Sunday and early Monday.
2. March (end of tax year, less money from lenders), January (very high demand for borrowing to pay for Christmas).

Also remember that Zopa is a market so if lots of people read this and do as suggested, the answers may change.

There's a referrer offer that'll save you £40 of the application fee if you apply before the end of December.

Interests declaration: I'll probably end up landing to anyone borrowing more than about 5,000 in the Zopa Markets, but if I do I'll get lower rates from anyone acting as I suggest than if I didn't write this post and they waited. Anyone using Zopa Listings and seeking more than 5,000, please contact me privately with the Zopa account you're applying with so that I can ensure that I don't lend to you.

TechnoBadger

Just noticed that there's around £1.5 million available on Zopa at the moment - that's probably around 3 times more than usual. Increased liquidity usually means cheaper loans at Zopa.

TechnoBadger

Any wrote: »

Is it con or is it real?

It's real, and for borrowers there can be no risk surely?

CoogarUK

TechnoBadger wrote: »

Just noticed that there's around £1.5 million available on Zopa at the moment - that's probably around 3 times more than usual. Increased liquidity usually means cheaper loans at Zopa.

Whilst good for potential borrowers (at least those lucky enough to pass Zopa's very strict lending criteria & credit checks) all this liquidity means lower returns for lenders though as it makes it much harder to get your money lent out at decent rates. Further, money on offer but not lent out currently earns a paltry 1.25% (paid gross but taxable) in the holding account