Zopa. Neither a borrower nor a lender be!

savvy

Hi Scrabble
I've moved your thread here to help you, as there are plenty of comments! There is also another thread that might be useful here
HTH
savvy

Diane_2

I didn't see Martin's article on Zopa. I was just curious. Sounded too good to be true...
Thanks.

Diane

The_fisherman

I was refered to a new company "Zopa "for a loan who appear to have very competitive rates . Can anyone give advice

Taylumbo

Hello

I have spotted a massive problem in the ZOPA.com theory which bascially means you have to earn twice the interest rate than you currently do to make it worth while (https://www.zopa.com) !
I thought I should point it out?

The flaw is, say I loan out £1000 for 1 year at 7.5% ( a well achieved rate on that site and apparently better than the banks!!!!) if I loan out that amount after month one the borrower will pay me back £83.33 leaving me with only £916.67 earning the 7.5 % interest and that amount will become less and less each month. As the money that comes back into the holding account earns no interest ,more and more money is sitting redundant and because you cannot lend out less than £500 you cant do anything with it. So therefore after one year you will only earn £37.50 interest over the year on the £1000 loaned (or 3.75% in interest) less than my current savings account and that is without factoring in the approx 1% possible bad debt factor!!
I suggest the Zopa either decreases the minimum lend or either allow lenders to earn interest on the non loaned money held in their accounts

this obviously wont affect borrowers on the site at all. overall if this gets sorted it will be an awesome tool

Rafter

Blimey - good scam! I'm sure Zopa themselves are earning a good rate on all the spare cash slushing around in the holding accounts.

The other problem for you is that 3% plus of customers never repay their loans or credit cards. So £30 of your £1000 might be lost through these losses, whereas building societies or banks very rarely go bust and can't pay their savers. There is also the savings guarantee system to protect savers.

Glad I didn't sign up now.

R.

gkerr4

Thats kind of the whole thing about Zopa though - that you need to actively manage your fund so that it is always 'loaned out' so to speak.

It is up to you to re-lend the money when it comes back if you see what I mean - the idea being that you should never have any money in the 'holding' account.

that make sense?

Taylumbo

yeah thats all well and good but the problem is as I said, The minium you can loan is £500 so you have to wait for 5 or 6 months to get enough money back to reloan, the only way around it is to loan out 6000 and then reloan the 500 you get paid back out every single month! That may be worth doing

Loaded_Bachelor

Martin Lewis may be interested to know that this endorsement appears on Zopa's web site using his name and web site as a promotional tool when in fact he's saying don't touch it with a barge pole.

(As seen on Zopa's web site on 4/12/05 at 2 p.m.)

Nick - Lender

Nick is 36 and single. He rents his home in Wokingham from where he runs his own computer consultancy. He's arguably a strategist - loving poker, chess and fishing.

"Banks are a necessary service - but are a little complacent because they know people won't go through the hassle of switching. They also charge too much - particularly on the business side."

"I heard about Zopa from the 'Money Saving Expert', Martin Lewis. Zopa is a fabulous and really rather obvious idea. It exploits the rather large gap between the rate at which people borrow and the rate at which they can save. I've got a lump sum in the bank and I am not happy with the returns. At Zopa I can get a better return on my spare cash."

"Potentially in the future, I might use my good credit rating to borrow and then lend back to people with a worse credit rating. I already use Betfair, and Zopa is a similar idea. It's appealing."

"I also like the fact I got to see my credit rating - even though I was interested in being a lender. At the moment I am just trying Zopa - to see if it really works. If it does, as seems to be, then I will put more money in."

apang

Did you even read what the message says?

"I heard about Zopa from the 'Money Saving Expert', Martin Lewis."

1. It's clearly not an endorsement from this site, or Martin.
2. The website does not appear in the message.
3. It is a quote from a customer, and not a message from the Company.

Don't you think you're being a little bit harsh?

CTT_2

When you register with Zopa initially they check your credit rating with Equifax.
So in my case I could borrow from the A market. Fantastic! However if I go ahead and apply for a loan they do the usual credit search. So surely whats the point of knowing your rating when you could still be refused. I think this is a bit of a gimmick.
They could easily say our typical rate is etc etc rather than given us our credit rating.
I suppose the only redeeming feature with their system I get my rating free of charge.