Cyclone Posted September 28, 2012 Share Posted September 28, 2012 Zopa means Zone of Potential Agreement. It's a financial term regarding lending and borrowing. The website basically allows someone with money to invest to make micro loans to other members of the public. The loans made are spread amongst different lenders, so if you lend £100 that might actually go to be parts of 10 different loans, all of whom might be borrowing several thousand. This helps to reduce your exposure to risk from defaulting as whilst 1 of those might default, it's unlikely that all 10 would. So I was wondering if anyone else had used it. I just set up an account and transferred a small amount in to give it a try. It's a reputable website, it's been around for about 5 years now and was widely reported in the press when it first launched. They make their money BTW by charging a 1% admin fee to the lenders for every loan (per annum). So some of my money has now been lent out at 7.5% (you get to set what rates you will accept), I will only get a 6.5% return due to the admin charge. You also get to choose what credit rating you are willing to lend to and what rate you require for the given credit rating. Has anyone else used it? Either to lend or borrow? Link to comment Share on other sites More sharing options...
Nagel Posted September 28, 2012 Share Posted September 28, 2012 I use Zopa as a lender. I get a far better rate of return than I ever could from a savings account with a bank even factoring in the occasional bad debt and fees. I'd recommend it to anyone, either as a lender or a borrower. I have one bad debt and one late payment in the three years I've been with them. And on the plus side you bypass the banks completely. The lender gets a better rate of return than he ever could from a savings account and the borrower can borrow cheaper than they ever could from a bank. Win/win I think Link to comment Share on other sites More sharing options...
Cyclone Posted September 28, 2012 Author Share Posted September 28, 2012 That's what I thought, I've been looking at it for over a year and had a few free minutes earlier this week. I've now lent out £60 of my initial transfer in. I'll wait and see how it goes with the initial balance, but if it's stable and reliable as I expect then I'll be putting some more in, maybe in 4 months time or something. Link to comment Share on other sites More sharing options...
Nagel Posted September 28, 2012 Share Posted September 28, 2012 That's what I thought, I've been looking at it for over a year and had a few free minutes earlier this week. I've now lent out £60 of my initial transfer in. I'll wait and see how it goes with the initial balance, but if it's stable and reliable as I expect then I'll be putting some more in, maybe in 4 months time or something. It's worth putting your money on Auto Lend where the payments automatically get lent out again because then you gain some of the advantages of compound interest. You need to regularly check your lending rates and adjust them to current rates as these fluctuate. I had this from Zopa recently which helped me keep on top of my lending and make sure people were taking up the money I have to lend them at the best return rate for me - 1) You can use the ‘more info’ blue button on the edit lending offer page to see the percentage of loans that you can be matched to in a week (% loans), and how much money you could lend to a market each week (lending forecast), per market. These can be adjusted either by changing your rate, or by increasing the amount that you lend to each borrower. 2) You can amend the ‘amount you lend to each borrower’ by amending the box below the grey table on the edit lending offer page. We do recommend that you stick to £10 per borrower, as this reduced the sum of money you could risk losing if they fell into bad debt. However, if you feel that your money is not being lent out fast enough, and you have a large loan book, you could consider increasing this figure. For example, if you increased this figure to 0.5% of the amount that you currently have on offer in the market, this would be £20. Before you consider doing this however, you may wish to check and see if you are happy with the expected bad debt rates on the market that you are lending to. 3) You may also wish to consider calculating the % return that you would get on each market that you lend to, after the 1% fee and expected bad debt are deducted. I have noticed that you could be getting below the average return in some markets, as for example, the B, C and Y markets rates are slightly lower than they were historically. You can calculate this by subtracting the Zopa fee and the expected bad debt percentage from the rate that you choose. This can all be found in the grey table in the edit lending offer screen. Link to comment Share on other sites More sharing options...
FACEBOOK Posted September 28, 2012 Share Posted September 28, 2012 ............................ Link to comment Share on other sites More sharing options...
Cyclone Posted September 28, 2012 Author Share Posted September 28, 2012 You aren't given contact details AFAIK, Zopa deal with bad debts, not you. Link to comment Share on other sites More sharing options...
FACEBOOK Posted September 28, 2012 Share Posted September 28, 2012 ............................ Link to comment Share on other sites More sharing options...
Cyclone Posted September 28, 2012 Author Share Posted September 28, 2012 The user names still exist, so you could probably find each other on the forums I suppose. If someone has defaulted though then you've probably lost £10, along with another 50 or so lenders. Link to comment Share on other sites More sharing options...
FACEBOOK Posted September 28, 2012 Share Posted September 28, 2012 ............................ Link to comment Share on other sites More sharing options...
Cyclone Posted September 28, 2012 Author Share Posted September 28, 2012 No, you can't. One of the key ways that it works is that someone who borrows does so from many people (most of whom are lending £10 to that person). Those who lend, do so in £10 chunks to many different people. The risk of a single person defaulting is thus spread across lots of lenders, but the amount lost is small. Link to comment Share on other sites More sharing options...
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