Zopa - what are the realistic returns if you lend?

jamesd

Georgeous George, personally I wonder why anyone would bother with the 36 month markets given the consistently low rates and what's available from alternatives that also put capital at risk. But people do, so I just live with it and mostly forget about lending to those markets myself. Though sometimes I do pick up 36 month borrowers and am happy enough to do so when that happens and they do pay enough for it to be worthwhile.

Gorgeous_George

Ho james

What's your late payment/bad debt like?

I intend to leave Zopa inside 5 years but if I change my mind maybe I'll offer to 5 year markets.

GG

jamesd

About as expected for markets. Nothing unduly troubling there from the borrowers, though I'm one of those not greatly happy with Zopa's actions and inactions. Listings not great but my minimum 16% offer there provides a lot of room for error.

Listings, my average rate was 18.81% for £930.00 lent. Of those, £130 of original lending have defaulted, one did a runner, leaving the address they applied from; the other an IVA that might eventually pay 48% of the remaining £75.60 of £80 lent to them. With interest on all remaining listings expected to pay something under £150 a year I'm roughly break even on listings if none of that IVA money arrives. A one year listing with £20 lent and £15.18 already repaid is in arrangement and making partial payments from time to time. A one year Listing with £6.05 of £10 lent repaid already is in collections. On Listings borrower with £50 lent at 19.7% has missed their most recent payment, not yet moved on to collections.

C 15.19% average on £1,180.00 of initial lending. One borrower with £10 lent at 14.9% has defaulted. Two C borrowers with £20 lent to each are in collections status and being chased. One with £20 lent at 12.5% has missed their most recent payment, not yet moved on to collections. With interest of around £180 a year at the start this is healthy enough even though one borrower repaid the £280 I'd lent to them quite early on.

No defaults in other markets, this after a little over a year.

One B borrower with £80 lent at 13.3% and £19.60 capital already repaid is in arrangement and making partial payments to cover interest after losing their job.

No arrangements or lates other than mentioned above.

So Listings not great but I asked a suitably high interest rate to protect me, though it might turn out not to be profitable above savings account rates or perhaps not at all. C is reasonable enough and the rest are fine.

All interest rates in this post are before Zopa's fee has been deducted. The rates I quoted here are not currently obtainable and required careful selection of when to lend.

Jonbvn

jamesd wrote: »

So Listings not great but I asked a suitably high interest rate to protect me, though it might turn out not to be profitable above savings account rates or perhaps not at all. C is reasonable enough and the rest are fine.

Vey similar to my own experience. I expect bad debt to worsen at least for the next 6 months to a year. Given, that you cannot offset bad debt against the interest, makes ZOPA a much poorer investment than I first imagined.

Personally, I can no longer see a future in it, and am steady withdrawing funds to use for other better investments.

PS. Although I will keep the account open.....