Zopa - A good way to earn some money!

febes

I came across Zopa when looking for a loan. It is a place where people lend to people. There are measures in place so that Zopa will chase anyone who does not pay, and all lenders are credit checked. You set your own interest rates. You pay 1% to Zopa each year, and there is a very useful forum.

I did look into lending, but I don't have enough money to invest to make it worth my while yet. I asked about on the forums, and they reckon £100 to start off is enough to make a good profit.

Anyway, as I find you all very helpful on here, I thought I would share with you all, in case anyone can make use of it.

It is a very legitimate way to make extra money.

RobHolyhead

Just signed up for this, only put in £100 I guess ill let you all know how quickey it matures

The_Big_H

Surely you could only really go to 5% interest though to stay competitive?
And after paying 1% commission to Zopa this leaves you 4%... on £100 this is only £4 per year interest.

Or am I getting this badly wrong?

Nosht

I looked at this 2 years ago, some people were achieving 10% but with a higher risk involved.
The way it is structured must wait for about 2 years to receive it all back.
Usual amout is £2-3K.
Looks fairly safe.

N.

Floxxie

It's definitely not risk free - I've got quite a few write offs and bad debts on my account and remember you have to do a self assessment form each year.

withabix

Floxxie wrote: »

It's definitely not risk free - I've got quite a few write offs and bad debts on my account and remember you have to do a self assessment form each year.

40% tax and the return is simply not worth the risk.

Rates are dropping AND yes-secure.com is apparently launching next month, which will dilute the market and reduce the returns further. Bad choice of name though - the conotations with Yes Credit spring to mind.

Lots of media coverage recently as well, increasing the number of lenders (and borrowers as well I guess) and probably reducing the return.

For example, there is someone borrowing on Listings today for a wedding. Most lenders are in at 8% right now, but there is even someone down at 5%

dogleish

I just came across this today and thought it's an awesome idea. A little confused about the tax thing though. So every year you have to tell the government how much you've made from Zopa and if it's more than £6000 combined with earnings that year you have to pay tax?

lsumal

Zopa is a brilliant tool. I signed up a year ago and invested £250 to try it out. It constantly tells you if your interest rates are competitive with other lenders and I had about 6 different categories ranging from between 8% to 11%. Over the course of the year, I've withdrawn around £120 that's been returned to me and have so far profited £16 from the interest, which is much better than my savings account has accrued!

You can set Zopa up to return all money to you or it can automatically re-lend it on an ongoing basis. I've had a couple of late payments but Zopa are very good at chasing up these payments and I've not had any bad debt.

Overall, I'd highly recommend giving Zopa a try. Very easy to set up and you can transfer your money back out within a couple of days.

edinburgher

Most lenders are in at 8% right now, but there is even someone down at 5%

While it might sound like a bad thing to you as a possible lender, it's great for the person wanting the loan! This is the 'social' side of Zopa - i.e. it's possible to get an improved rate if you're articulate, seem honest and want to borrow the money for something that people generally approve of (i.e. a wedding, as opposed to yet another 'consolidating other credit' request).

Still, I wouldn't be risking my tenners on a listing with such poor return. Anecdotally offering money to people with listings is more likely to result in default and a lot of lenders only stick to the markets.

I'm a Zopa newbie too, but have been drip feeding with £20 a month or so and intend to use it a lot more in future now that I'm getting used to how things work.

I should point out that it's a fairly high risk investment (not a savings product). You're not covered by the savings guarantee, if an individual borrower defaults you could see a big dip in the value of your investment (for example, I've currently got 11? borrowers at a tenner each, if one of those decides not to pay anything back I've lost close to 10% of my investment).

Zopa will send the debt collectors after any defaulters, but a) you'd probably only get pennies on the pound selling on the debt and b) having had debt problems myself in the past there's no way I could ethically use a debt collector to hound someone, regardless of the breach of contract involved!

Fergie76

Is this place a decent place to borrow money or better to stay clear of?

edinburgher

Fergie76 wrote: »

Is this place a decent place to borrow money or better to stay clear of?

It's an an entirely legit way to borrow money, but you should shop around as you won't necessarily get the best rate there.