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Zopa Uk Peer to Peer Lending
By David Jones
Different P2P lenders operate differently but below is an example of how Zopa in the United Kingdom operates.
To join Zopa you sign up as a lender or a borrower. If you sign up as a lender you then decide how much you would like to lend from £10 upwards. Zopa has Markets and Listings. Information For Borrowers, To borrow you sign up with zopa and then a credit check is done and subject to them deciding you are creditworthy you are assigned the market you could borrow in or alternatively you could put up a listing and let lenders bid directly on your loan request. Zopa charge a transaction fee of £94.25 to borrowers and loans can be between £1000 and £15,000 over 3 or 5 years. One very strong feature is that as a borrower you can pay it back at anytime with no early re-payment penalty. It is worth noting that zopa will only accept borrowers with a good track record and it has been reckoned that less than 50% of the UK population are eligible. Information on lending.
In the Markets you choose the rate and amount you are prepared to lend at in each market over 36 or 60 months. The markets are A*, A, B, C and Y. A*-C reflects the quality of the borrower and Y is for people between the ages of 20-25. Zopa's system will show you as you put a figure in what your expected return would be after their fee (1%) and bad debts. As an example if you offered to lend at 10% to an A* borrower over 38 months your expected return would be 8.5%. When you lend money in a zopa market you are ranked by date when you offered the money and interest rate offered so if a borrower wanted to borrow £5000 the lenders offering the lowest rates from £10 to £5000 would be part of the loan.
While you are waiting for money to be lent out Zopa pays you interest of base rate less 0.75%.
Listings are more like an online auction where a borrower publishes information about themselves like loan purpose, loan amount and income/debts and lenders compete with each other to be part of the loan. For example if someone wished to borrow £1000 and each lender was bidding £10 only the 100 lenders offering the lowest rates of interest on the £10's would be part of the loan when it closes.
Here are some examples of the loan rates people have been offered today
£3000 @ 9.67%
£15,000 @8.47%
£7000 @8.67% Further information on zopa and social lending is available at http://www.carpetbagging.co.uk/person_to_person_lending_zopa.html
This intel first appeared on: http://www.carpetbagging.co.uk/person_to_person_lending_zopa.html
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