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I found Zopa when I was looking around for a loan I wanted to consolidate my debts. It's a bit of a game I play with myself, and one in which I always believe that this time I really will pay off my credit cards, whilst not using them for the next holiday at the first sign of the cloud of never -ending debt re-emerging.
Zopa is a new and completely different way of getting a loan. It's not a bank, that's for sure. They were too friendly to be mistaken for a bank.
When I joined them as a member I was apparently not recognised by the systems they have in place. Fearing this was going to turn into another paper-trail of proving I am who I say I am, and that I wasn't the former-dignitary of some little know african nation or any such other scamster, I resigned myself to trying more traditional methods, like a real bank. Imagine my surprise though when they contacted me inside 24 hours and, a few more questions later by telephone, I was signed up!
Actually getting the loan was, believe it or not, quite fun. Once I had been credit-checked and given my credit score (can you believe they actually gave me the score - do any other banks do this?) they allocated me to the B market. Now when I was at school, I was pleased to get a B. On Zopa however, there are only two markets, and you guessed it; the other one is A, not C. Being slightly disgruntled (I had always thought I had an unblemished credit history), I continued to see what this would mean for the interest rate I would have to pay.
After playing around a bit with rates and amounts (the rate calculator was really quick to get results) I noticed something else a little strange. I checked again, just to make sure I wasn't going completely mad, but it turns out the lower the amount of the loan I requested, the lower the rate I was offered, and the same thing happened when I played with the length of the loan - 12, 24 or 36 months. Again the shorter the length of the loan, the lower the rate I got. Weird. Whenever I have gone to banks before they have encouraged me to take larger and longer loans by offering me lower rates for those loans. It is a bit of a shame that you can't get longer loans over, say, 4 or 5 years, as this would make a loan of £10,000 or more significantly more affordable.
Needless to say I ended up playing around some more before plumping for the amount of the loan and the length of time that combined gave me a rate I was comfortable with, as well as a repayment amount I could easily afford. I ended up with a loan of £5,000. They did offer some loan repayment insurance as well, but I chose not to take it at the time. And the rates were really quite low, even though I was in the dreaded B market. I've kept an eye out since, and there aren't many adverts for lower rates than the one I got, and I have either been turned down or found the interest rate changed between the advert and what they offer me.
And all the interest I do is apparently going directly to individuals that lent the money and not to Zopa. Zopa appeared to make no charge, although I think they were waiving their usual fees due to the recent launch, and presumably to attract enough people in the early stages to make it a success.
They charge borrowers a 1% fee of the total loan amount and this covers their costs. They also charge you if you miss a payment more than 2 months in a row. If your a lender it is completely free to use though.
ray52 18.08.2005 21:36
Hi and a warm welcome to ciao. Some super info there in your first, well-written review. I hope you enjoy the ciao experience, as I do. Ray