Zopa. Neither a borrower nor a lender be!

jamesd

fallen121, you're not alone, it's very common and I was declined for markets as well, perhaps due to a lack of rules for a thin/sparse credit record in my case, at the time. I used to recon on decline rates of over 90% for the loans that matched my offers, less for offers in general.

No need to fret about not being able to borrow £5,000. Chances are that you'd get a better rate on a credit card 0% balance transfer offer from Virgin or one of the other MBNA partners anyway.

blizeH

Just watching a podcast where they mentioned 'Lending Club' and this seems to be the best UK alternative. I don't have masses of money to invest (NS&I Index Linked account and a mortgage have seen to that!) but this seems like a great idea, not only do I like the idea of it from an investment point of view, I also think it's a superb idea that benefits all parties.

Is there anything I should know about before putting money into this? I was thinking £1k at first, and building on that. Anything above 3% would mean I'd get a better return than my mortgage, so I really shouldn't struggle to get that using this, according to what I've read on here and their site...

Thanks

Paul_Herring

blizeH wrote: »

Is there anything I should know about before putting money into this? I was thinking £1k at first, and building on that.

Start small - £100 or so. You'll struggle to lend out £1,000 in a reasonable amount of time as a beginner without dropping your rates so low that it doesn't make it worth it.

blizeH

Nice one, thank you Paul - think this will be replacing saving accounts for me in the long term, just seems a perfect solution - with both parties getting better interest rates than they would otherwise. It's lame but I really like the idea of directly helping someone else out too (I know if I didn't, someone else would by the way, but it's still a nice feeling!)

paddyrg

Also look at ratesetter.com who have a fund to absorb bad debts, which protects the lender a bit and they don't need to make their own assessments.

Rafter

blizeH wrote: »

Nice one, thank you Paul - think this will be replacing saving accounts for me in the long term, just seems a perfect solution - with both parties getting better interest rates than they would otherwise. It's lame but I really like the idea of directly helping someone else out too (I know if I didn't, someone else would by the way, but it's still a nice feeling!)

Remember that Zopa lending is an investment and not a savings account.

If the economy takes a nose dive, with a savings account you are protected by the fact that the bank or building society has capital (shareholders and retained profits) that will take losses before you do. A lot of their lending is secured, ie it is mortgages and business lending backed by things that can be sold. You are also protected by the FSCS guarantee.

Zopa will give you great returns in the good times but if just a few of the people you have lend money to get into difficulty you will get back less than you put in.

R.

blizeH

Many thanks guys, certainly seems a risk with the economy the way it is, but it's still an idea that I can really quite like, and will be investing just a small amount anyway and seeing how it goes :-)

On that note, I made a transfer yesterday, and despite Lloyds bank transfers being instant, there's still no money in the account - argh!

blizeH

Okay, lending £1k now at Zopa and £1k at Funding Circle... RateSetter here I come?

First impressions btw are that I much prefer FC to Zopa - it seems a lot more personal, and even though I just did the autobid option, it still shows me information about each person/business I'm loaning too, which is a really nice touch.

datostar

blizeH wrote: »

Many thanks guys, certainly seems a risk with the economy the way it is, but it's still an idea that I can really quite like, and will be investing just a small amount anyway and seeing how it goes :-)

On that note, I made a transfer yesterday, and despite Lloyds bank transfers being instant, there's still no money in the account - argh!

Your 'faster payments' transfer goes to Zopa's RBS Account in the first instance then reaches your Zopa Holding Account the following day, normally around 11am. They send an email to tell you it's there.

JohnRo

This forum might prove useful, especially for the p2p lender

http://www.wiseclerk.com/