Thoughts on Zopa?

jamesd

Negatives:

1. For smaller amounts, perhaps up to £10,000 to £15,000, and for terms of up to 18 months the people who qualify to be borrowers are also likely to be able to get 0% for purchases credit card deals or credit cards like Virgin that allow a balance transfer to a current account for a 3% fee for a year or more.

2. For those amounts and larger the same people are also likely to qualify for some of the most competitive deals in the personal loan market, with rates below 7% APR available to some.

3. The Zopa fee that can significantly raise the real APR if you pay the money back faster than you say you plan to when you take out the loan, because the fee is spread over the whole loan term when it's added to the basic loan rate to get the APR.

4. You don't get all of the consumer protection of regular lending, specifically things like the Lending Code or membership of a normal trade organisation that has standards of conduct that are enforced on all, rather than the new one for just two per lenders that's been set up and which in its first year is chaired by Zopa itself. Don't expect that to offer you independent help with any trouble! But you do get the more important Financial Ombudsman Service protection so this isn't a big point, just worth knowing about.

5. Zopa is atrocious about giving reasons for decline decisions, saying pointless things like check your credit record when it's clean. It tends to say nothing substantive, as though there's an undending pool of potential customers who will consider P2P - and proved it by applying - that it can annoy without affecting future business. Some superb lenders will actually have a sensible phone call about a decision and give you real reasons for a decision. Very wise to do well in this because credit records change after no more than six years, so today's non-customer is tomorrow's possible customer.

Some positives:

6. Unlike the credit cards you're sure to have a longer time period than 18 months if you need it, while with the cards you'd need to get another deal. Not likely to be that hard for anyone who can get a loan via Zopa but not likely isn't the same as guaranteed.

7. If the application is declined all that appears on your credit record is a quotation search, so it won't harm your chances of getting a loan somewhere else.

Neither:

8. Don't expect lax debt collection. Zopa will use all normal debt collection methods, including having courts issue orders to people to come to court for questioning about their financial situation if they aren't paying and getting CCJs against people. There's a firm of solicitors that takes care of that end game, while a debt collection agency does the medium term. Short term tings like a late payment or making an arrangement is handled by Zopa itself.

9. Do expect a willingness to make arrangements for lower payments if that becomes appropriate. One case where I offered some guidance was someone who got into trouble with payday loans and asked for reduced payments for a few months on the loan via Zopa to help to get rid of those more quickly, before the situation became unrecoverable.

It's worth including Zopa in the list of places you might borrow from, if you get a good rate compared to others you can get.

Declaration of interest: I've both borrowed via Zopa and lent via Zopa but don't currently have any offers to lend in the Zopa markets.

21yrold

I've used zopa for loans since i was about 19, so 5 years...Hopefully wont need to ever use them again as i dont want loans etc but they have been great to me!

Saying that I've never missed a payment with them, i took out one loan to pay off the other one years ago so they let me have both loans etc

Always keep me informed when a seller drops out of my loan and say dont worry another one is in place etc!