Zopa. Neither a borrower nor a lender be!

Paul_Herring

ErikP wrote: »

A lot of ignorant commenting [...] on this thread.
[...]
As for "customer service" I don't want there to be any. This is a way of using modern technology to undercut the banks. If you can't cope with the automation go and see Mrs Goggins at the Post Office (while it is still there).

Oh the irony.

So what do you do when you have a problem with any company if you don't expect any customer service?

ErikP

Paul_Herring wrote: »

Oh the irony.

So what do you do when you have a problem with any company if you don't expect any customer service?

Customer service is labour intensive and costly. I have a background which includes doing some for an IT product. 90% of my time was spent answering dumb questions from people who seem incapable of absorbing information from a screen. It really hit my employer's profitability.

ZOPA is a small, lean organisation dealing mainly with tech savvy people who are comfortable with the way they work and who understand the proposition and the risks. I would prefer it to stay that way. As long as they keep their promises that is all the service I want. If they break their promises I will do my best to make their lives miserable. That approach even works with NatWest who advertise customer service but rarely manage it.

If you want personal banking customised to your unique needs with a real person to chat with there ARE private banks and it costs a lot to use them.

Oh dear, I could have had a nice cup of tea in the time it took to type this.

Geoff23

519mcnel wrote: »

Agree that the original advice has been overtaken by events.

I heard a programme about Zopa on R4 recently and have been interested in becoming a lender (with 1-2k) and am willing to accept some risk.

Can we have an update please before I dive in!

Cheers,
CH

I am amazed at what I have read in this thread. I can only conclude that it made sense a few years ago and is now hopelessly out of date. From the point of view of a lender/saver, ZOPA is superb. Right now you are not going to get a bank savings account which even covers the inflation rate. With ZOPA you get far more than this. You can also manage your risk by setting your rates for the B and C markets prohibitively high so you only lend to the best borrowers. I am also lending into the youth market. I've had a few thousand pounds lent out via ZOPA for a couple of years and have only had one missed payment of £10.

Add to all that the fact that all other investments look dodgy right now...the banks themselves are still not immune from going bankrupt, the stock market is in a bubble, gilts aren't paying much unless you want to lend money to Greece and Ireland. There's always gold, of course....

Do not believe what you have read in this thread about ZOPA. This is all about bypassing the banks which are acting as parasites on our society. It is one of those pleasant but unusual circumstances when doing the morally right thing is also financially beneficial.

Having looked around at various places on the internet, I strongly suspect that there is "astroturfing" going on. i.e. I believe that there are people being paid by the banks to impersonate independent members of the public, who are posting misleading negative comments about ZOPA on boards like this one. They want to scare people into keeping their money in bank accounts. I can't overemphasise this enough: our whole society is currently run in the interests of the banks. Anything you can do which they don't want you to do is good, good, good.

paddyrg

Seeing as this thread has been raised from the dead, it may be useful for some people to also check out ratesetter.com, much like zopa but only lends at the prime end of the market and has a different model (a buffer) to reduce bad debt shocks for lenders. But it is a much younger company, so a far less proven model.

Geoff23

paddyrg wrote: »

Seeing as this thread has been raised from the dead, it may be useful for some people to also check out ratesetter.com, much like zopa but only lends at the prime end of the market and has a different model (a buffer) to reduce bad debt shocks for lenders. But it is a much younger company, so a far less proven model.

Cheers, I will investigate...

jamesd

Geoff23, Zopa's worse now for investors than when most of the comments in this topic were written. Rates are even lower than they were and well below what you can get elsewhere when you're willing to put your capital at risk, as you do at Zopa. Have a look at the recent "Anyone lend out with ZOPA?" discussion for recent examples of rates available elsewhere that beat Zopa, starting with 8% before tax almost risk free in a savings account. If you dislike that from a bank there are plenty of non-bank options discussed that also beat Zopa.

Geoff23 wrote: »

You can also manage your risk by setting your rates for the B and C markets prohibitively high so you only lend to the best borrowers.

If you set your rates above the norm for a market you'll lend to only those who are after larger loans (the good case) or who are worse risks and willing to pay more (the bad case) or who like P2P lending and don't care so much about rate (another good case).

Geoff23 wrote: »

I am also lending into the youth market.

What do your after tax and bad debt returns like if the estimated bad debt is hit? What if you saw twice that rate, as we saw roughly for lending during 2008?

Geoff23 wrote: »

I've had a few thousand pounds lent out via ZOPA for a couple of years and have only had one missed payment of £10.

I'm glad you missed 2008 and I'll hope that your good fortune continues.

Zopa's a really nice idea, let down in part by it often being easy enough to get a better rate while investing and a better rate while borrowing.

Declaration of interest: I have both a loan via Zopa and lending via Zopa, though at the moment I'm not actively making new loans.

Geoff23

jamesd wrote: »

Geoff23, Zopa's worse now for investors than when most of the comments in this topic were written. Rates are even lower than they were and well below what you can get elsewhere when you're willing to put your capital at risk, as you do at Zopa. Have a look at the recent "can't post this link" discussion for recent examples of rates available elsewhere that beat Zopa, starting with 8% before tax almost risk free in a savings account. If you dislike that from a bank there are plenty of non-bank options discussed that also beat Zopa.

I has a look at that firstdirect 8% savings account. Looks good, except you need your current account with them first before you can apply, yes? And I have very little reliable income...

What do your after tax and bad debt returns like if the estimated bad debt is hit? What if you saw twice that rate, as we saw roughly for lending during 2008?

I think I'd still be better off than most savings accounts...

I'm glad you missed 2008 and I'll hope that your good fortune continues.

I saw the crisis coming in September 2008 and sold my house just before then because I expected a huge crash in the housing market. Little did I know that the powers-that-be would then rig the whole economic system in unprecedented ways in order to prevent that bubble from bursting catastrophically. IOW, I didn't have anything to "invest" in 2008.

I'm not in a typical position. I have about £80K left in "savings" from selling the house, but I have about zero chance of ever getting a normal job again. I earn a small amount teaching people how to forage for wild food, but not enough to pay any tax. I believe the stock market is in a money-printing-inspired bubble and will crash again at some point soon. I have bought a significant amount of gold. ZOPA is by far the best other alternative I have found.

Oh, and I believe the banks are the closest thing there is to pure evil other than maybe Rupert Murdoch. Thanks for the interesting post in the other thread and any other advice would be gladly listened to.

:-)

Geoff

jamesd

First Direct has a minimum monthly payment requirement for the current account but it's easy to hit that by transferring money in, out, in, out, repeat as required. And you'll get an extra payment for opening the current account. You'd also open one of their normal savings accounts because that avoids any chance of getting charged their current account fee. It's some easy free money for anyone who wants it.

I wasn't greatly impressed with what was done about housing in 2008. There seemed to be a ministerial attitude that maintaining high house prices was desirable.

Your situation is a tough one if you have no income other than from investments because you have too much capital to get means tested benefits, but not really enough capital to live on indefinitely if you use the 6% of capital as income assumption that's reasonably likely to be sustainable. That's only £4800 a year.

Personally I think holding gold much longer is unwise, particularly for significant amounts of money. Too much of the demand is due to economic uncertainty that is gradually being resolved. So I think it's a very high risk thing to be holding, even higher than Zopa.

One small positive from your situation is that you aren't disadvantaged by the tax treatment of bad debts with Zopa so you could consider the higher risk markets, something that's tougher for those who are tax payers.

I'd probably look to the higher income bond and income funds I mentioned in my other post given your situation. Using a mixture you could probably still end up at over 7% tax free within a S&S ISA. I don't think going for over 8% would be a good idea. 7% would get you £5600 and be reasonably sustainable. Still not enough to live on in much of the country.

Another possible route is buying a home outright and then using means tested benefits. The home purchase should avoid the deprivation of assets problems. Don't know prices where you are but in many places you'd have enough to do the purchase and still have the maximum savings amount left.

Geoff23

Cheers James

I'll think about the advice. The one thing I'd say straight away in response is that I don't believe the financial problems which started in 2008 are any closer to be resolved now than they were then. In fact I think the situation is now worse than then, and still deteriorating. I think the gold bull market has a very long way still to run, although it might dip sharply first, in the coming weeks.

Geoff

mutter

jamesd wrote: »

.....................Don't know prices where you are but in many places you'd have enough to do the purchase and still have the maximum savings amount left.

Not around Brighton where Geoff and I live!
He wouldn't get a studio flat for £80k round here, unfortunately.

I'm in a similar position to him with a bunch of money but still doomed to a lifetime of paying rent.
I'd like to make my money work for me, but I've looked at zopa and I'm not conviced it's the right way to go.