Zopa is a social lending and borrowing website that allows you to exchange with other people in the community.

The site was founded through consumer research showing people were fed up with borrowing money from banks who make huge profits and that certain people found it hard to get credit.

The community aspect of Zopa is that the people lending the money are you and me, in fact anyone can sign up and start lending their own money to other members.

You get the control to set your own interest rates and to set the market you lend to. When signing up to borrow money you have to be credit checked, the outcome of this then puts you into one of four markets - A*, A, B or C. The better the market you are in, the lower the interest rate you will be able to borrow money at.

Zopa stands for 'Zone of Possible Agreement' and states that the average interest rate is about 6.75% however usually for an A* market this is lower at about 5.5%.

This is great for borrowers in this market as the interest is much better than what you would find on the high street. This isn't so good for lenders as after Zopa fees and tax you would be better off putting your money in a savings account.

The B and C markets are where lenders are more likely to make a better return, however the risk of lending money is significantly increased. 


**the rest of this blog has become corrupted**


Hi Pete!

So you're one of the pioneers. As I understand it, both ZOPA and Prosper have about 40 million $ in loans standing out. Somehow this number doesn't seem to be moving - suggesting that this is not really catching on. Which is ashame, at some point in time this is the mechanism that we will use instead of going through our banks.

There were a few articles posted on for instance Prosper that some borrowers didn't even bother to make the first payment. How are your experiences with that? To me it sounds a bit worrying, because you really need about 98% of borrowers to have outstanding behavior for this to be more attractive than a regular savings account ... anyway, also have a look at circlelending.org and www.kiva.org ...

All the best!

I'd always wondered what Zopa looked like inside, and how quickly the loans went through.. Thanks for this insight!

Also take a look at Kiva org, in this you lend money to people in poor countries for them to setup bike shops, or sewing business, and you get your money back (well 95%) of the time.

take it eeeasy

I've not had a problem so far with people not making back payments - I guess that they are doing a good job of doing credit checks on people before they are lending it out.

Cheers for the other links, will check them out!

Might be worth you taking another look at Zopa my friend. I'm currently getting 10% plus from A and A* borrowers.

No affiliation with Zopa, just a happy user and personal finance blogger. :)

thats interesting to know even with the current lower interest rates at the banks