Zopa Loan - Possibility?

00ec25

there are 2 parts to Zopa
a) the "market" - here you are vetted by Zopa's own underwriters and they will decide themselves if you are credit worthy and will offer you a rate based on their assessment of your status. the factors they use are of copurse commercially sensitive so not known but you would probably be placed in the Y (young persons) market - this means someone too young to have built up a credit history yet and therefore a largely unknown risk, you may be a star at repaying but there is no actual proof of this yet cos you ain't repaid nothing yet. rates on the Y market are a lot more than 7% currently. The minumum term is 36 months but there is absiolutely nothing stopping you paying it off in full wherever you want - the fee you pay is upfront, there is no early repayment fee. I have had numerous people pay off in well under 36 months
or
b) you do a "listing" - in this you will have to convince lenders like me to risk our money on you personally, we will want to ask all sorts of questions. Then again there are any number of reckless lenders who will lend money to a lost cause and not care about it. A listing is like a lottery - the rates can get stupid low on borrowers who would be turned down flat in the "market". On a listing you can chose the term so you could set it up for 24 months, short term loans typically get lower interest rates

advice?
- your age is the single most important factor, sad but true
- credit searches and the car loan help but can say for sure what impact they will have
so
- get a quote from Zopa markets - it will cost you nothing but some time to get one and you'll know for sure where you stand rate wise
- if you don't like the market rate set up a listing, you will be expected to mention you hold a market quote (or were turned down by them) but as i say the listing can get really mad responses and stupid low rates for a small minority of applicants

what you want to spend it on will interst the curious but once Zopa has guiven you the money they (we) have no control over how you spend it so the wise Zopa lender ignores what you say as its outside our control, so largely irrelevant, eg approx half of your reasons are simply existing debt consolidation in one form or another

paddyrg

You sound pretty rational and balanced, although a lack of credit history may count against you and get you higher rates offered. Zopa rates are typically as good as you'll find anywhere, often better, but they still really operate at the prime end of the market with experienced proven borrowers to reduce risk, so that 7% may not happen. Then again, I have seen people bidding to undercut one another for listings lendings that I would never touch at 20%+, so you may get a hit!

Personally, I would look at reigning in the ring a bit - I know you want to impress the mrs-to-be and it is sweet you've been together since you were 15 and all... but she won't love you any the less for a £300 ring than a grand's worth, especially if you make the proposal somewhere special, etc. And even a £300 ring is quite a lot! When the princess and I got engaged nearly 20 yrs ago, we didn't have two buttons to rattle, holidays meant camping, working meant odd bits of temping or barwork, and consequently we spent £20 on engagement rings. The important thing was that we knew what those rings represented, as did our friends and family - anyone who passes judgement on the ring is not a friend! And that say £700 saved means your total repayment would be under £3500, less without the holiday. Less still if you use a 0% credit card to buy the ring and insurance...

jamesd

00ec25 and paddyrg, please declare an interest if you have any financial interest in Zopa lending.

FoxtrotUniformCharlieKilo wrote: »

Basically I would like a loan. Roughly £3750, (I don't really want to pay back more than 4k in total including interest).

For a loan size that small one thing you almost certainly need to avoid is any loan with an arrangement fee.

FoxtrotUniformCharlieKilo wrote: »

I only really intend to have the loan for 2 years (however I think zopa is minimum of 3 years). Realisticly though, with the option to pay off more each month, I could pay a loan this size off in 18 months.

Use caution if applying for a loan with an arrangement fee with a three year term when you plan to pay it off in half of that. The APR you're quoted will significantly under-report the true APR you get over 18 months because the fee is split over the initial term applied for, not the term you actually use.

For £3750 for three years Zopa illustrated today an underlying loan rate of 6.7% which becomes 9.1% APR over three years after the effect of their fee is added. Pay it off in half the time and that rises to more like an 11.5% APR.

However, that illustration seems to be using something like the A* 36 month rate, usually the lowest rate available via Zopa and only available to exceptionally well qualified borrowers. Given your age you'd actually be placed into the Y36 market. That has an underlying interest rate that instead of about 6.7% is actually about 9.8%. That adds another 3.1% taking you to about 15% APR over 18 months.

FoxtrotUniformCharlieKilo wrote: »

£800 to clear O/D
£1000 personal debt to family/friends.
£350 for outstanding balance on alloys.
£500 to consolidate a future debt of spending money for holiday this year.
£750 to pay car insurance that will be due in September (don't want another year long DD)
And the BIG one. £500 - £1000 on an engangment ring

Those are OK, primary purpose would be engagement ring perhaps, or maybe debt consolidation.

FoxtrotUniformCharlieKilo wrote: »

Next bit that I guess will help you guys know whether Zopa would be interested in lending to me is my personal circumstances.

Unlikely. New job, doesn't look like much credit history, young market (which means you'll be paying more than the illustrated rate even if accepted). Definitely not worth bothering until you're on the electoral roll. Salary itself would be fine.

FoxtrotUniformCharlieKilo wrote: »

Final other thing I had to say was that the reason Zopa interests me is obviously because of the better interest rates but also because I have seen that you can pay off more each month???? Is this true???

It's not true that Zopa has better interest rates for the amount you're interested in borrowing. All lenders, not just Zopa, are required by law to allow you to make overpayments whenever you like. It's not in any way specific to Zopa. Lenders are allowed to charge up to a month's interest for this, Zopa is one of those who doesn't make that charge, so it's better than some.

The cheapest way to do what you want is a 0% credit card deal, the cheap credit card loans article says more about it. These are also interesting:

Super Balance Transfers Shift loans or overdrafts to 0% cards
0% Credit Cards Up to 15 mths interest-free spending
Cheap Credit Card Loans Manipulate plastic to get a 6.6% loan

Easy one: balance transfer from your current account to a Virgin credit card (which pays money into your bank) for a 4% fee and get 18 months at 0% on the card, an APR of under 3%. Even better, the minimum payment is low so you can put most of your repayment into a savings account and earn some interest on it.

Or get a 0% for purchases card, switch as much as possible of your current spending to the card and use the money switched to pay off the existing borrowing. Even cheaper than the balance transfer, just takes a bit longer to do.

It's not worth considering a personal loan for this amount and term until you've tried cards and found out whether you're accepted or not. Just throwing money away otherwise. You should also wait until you're on the electoral roll before applying for a credit card.

paddyrg wrote: »

that 7% may not happen.

May not? The prospective borrower is 21! That's young market, not A*36. 15% is more like it after allowing for the fee over the true 18 month loan term contemplated.

paddyrg wrote: »

Then again, I have seen people bidding to undercut one another for listings lendings that I would never touch at 20%+, so you may get a hit!

Given the effect of the Zopa fee the rate would need to be about 2.2%. Let me know if you've ever seen a Listing end with that rate or lower.

Claiming that something half the rate of what's really obtainable could be achieved is not a fair thing to be doing to prospective borrowers here.

Zopa is nice in assorted ways but making bogus claims about it offering 7% to a 21 year old for £3750 over an 18 month term isn't doing anyone any favours.

Declaration of interest: I both have a loan via Zopa and also loans made via Zopa, though I'm not currently offering to do any new lending there.

Dabooka

Funny how things change over time....

jamesd

Nothing wrong with changing your mind 18 months later.

ViolaLass

jamesd wrote: »

Nothing wrong with changing your mind 18 months later.

There is something wrong with not learning to live within your means during that time.

Dabooka

jamesd wrote: »

Nothing wrong with changing your mind 18 months later.

I think you're missing the point somewhat. He's not just decided to get a loan, look at what it's for;

He mentioned in the previous thread about not wanting to borrow from friends or family etc, and now he's up to £1000 in debt to them. A GRAND!!! I feel awful if I leave my wallet at home and borrow £50 for the evening, but £1000 is a silly amount to be in debt to friends and family for.

He's also £800 in his o/d (which he never had previously) and is trying to loan his way out of his debt problems.

Sorry Foxtrot, you don't appear to have understood that you're living beyond your means. You've got an extra £6k a year at work, which is a great opportunity to a) clear your debt and b) start saving for the ring. Borrowing more is not a good thing.

jon_boy75

If you register with Zopa, I believe they will do a soft search of your credit file to give you a loan quotation. Only if you go ahead to a full application will they do a full (visible) search on your file.

This will not appear on your file to other lenders.

If you like the Zopa approach (p2p), try Yes Secure aswell.

If you havent applied for credit in the last few years, a couple of applications will not hurt your credit profile.

jon_boy75

so, to answer your question, yes a Zopa loan could be possible if all the info you have provided is correct, but maybe not at such a low APR as you would like

good luck

paddyrg

jamesd wrote: »

00ec25 and paddyrg, please declare an interest if you have any financial interest in Zopa lending.

I don't, but I did a bunch of research to see if I would fancy investing - and noticed a load of people undercutting one another to offer rates I wouldn't feel easy with. I suspect some people don't understand how to crunch the numbers for risk.