I'm a consumer who likes things just right. I'm more than happy to say when things could be improved and very happy to say when I love a product. I like to think that if I like something, then most people like me would like it too.
Loan (ar) Ranger
Fun, easy to lend, makes you feel good, can earn better interest than a bank sometimes .
Can lose your money, your money is tied up - I mean it's tied up for years (or forever)
Promptness of service
Efficiency of service
Competitiveness of charges/rates
Online - Content/organization of siteAverage
Online - Reliability/speed of siteGood
Online - Ease of applying for productsAverage
Online - Investment trackingGood
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Zopa is a company based in the UK which offers an alternative way to make money for those who want to make money, or an alternative way to get a loan for those who want to get a loan. It's a bit like ebay, but for loans.
How it works — borrowers You can apply for a loan either by creating a listing, which is effectively your chance to plead to some lenders for their hard earned cash by appealing to their kind heartedness. If you put a picture up showing you're a good looking girl, or write an amusing yet convincing argument about why you want the loan then you might get a decent rate. If your case isn't good, or you've put up an ugly male picture, then you might be offered the money but at a worse rate. In reality of course people aren't going to judge people on looks and personality when it comes to lending money, I'm sure it's purely based on a sound business like assessment of your ability to repay. As more lenders want to cash-in on your unfortunate cash-flow predicament, they'll try their best to get as much money offered to you as possible at the highest rate they can manage. They might question you on your finances too and allow you to explain yourself. Generally you'll find the experience either amusing or slightly humiliating depending on how much you enjoy complete strangers telling you how you should manage your money.
Once the offer process is complete (typically 7 to 10 days or so) you'll have a list of people who've given you offers, and the best ones who add up to the amount of money you wanted
are chosen. You can then accept the loan, or reject it. Your choice.
There's a second way — markets. This is where you go through a loan application process a bit like any other loan provider, and say how much you want to borrow etc. Your credit rating is assessed and then you're offered a loan depending on your credit rating and the amount you wish to borrow. You're matched with lenders in this process too, but they can't taunt you and offer you bad offers just because they don't like your loan purpose. On the other hand they can't offer sympathy loans either.
So of the two ways of lending loans, one way (called Listings) involves presenting yourself to your would-be lenders and getting explicit loans from them all. This way offers more flexibility for you as you can be more flexible over the loan length too. The second way (Markets) is a little more anonymous, but less flexible in terms of the loan lengths offered. It seems that if you have a bad credit rating then it's more likely that you can get a Listing loan (the present yourself way) than a Markets loan.
The advantage to you as a borrower is that you can potentially get a lower rate loan than you could from somewhere else. You can also pay it back in advance if you're suddenly feeling flush, with no penalties. The loans are unsecured.
How it works — lenders If you've got a sock drawer full of cash floating about and you want to invest it then you have the opportunity to lend it to someone. Now in theory you could lend it to Boy Band Ben from round the corner who wants £20,000 at 8% to set up his new band. As long as he doesn't go bust and he keeps paying you back then you're alright. However, what if Boy Band Ben doesn't make the big time? Then he goes bust and you've lost £20,000! So better to just lend him a smaller amount and lend the rest to someone else... there's less chance of both of them going bust, and so you've got less risk in lending to them. So that's the idea of ZOPA as far as lenders are concerned. You split up your money into tiny little loans to loads of people, and chances are that most people won't go bust. Chances are also that some people WILL go bust, but then you set your rates with that in mind. (At least we don't have a fragile economy with uncertain employment prospects and huge amounts of debt everywhere. If that were the case then lending to random strangers who can't get loans elsewhere might be a bit more worrying... ahem... moving on...)
You have two ways to lend (a bit like the borrowers have two ways to borrow).
1. Tell ZOPA you only want to lend to people with a particular credit rating
2. Go to the listings and find the people begging for your money and lend to them if you like their hair. (after all, the financial info they put down is probably nonsense).
If you lend to people with a particular credit rating you can specify which credit ratings you're willing to lend at, and for what percentage interest, and over what period (min 3 years, max 5 years). So you might be happy to lend out £1000 to A rated customers at 7%. If your rate is the lowest for these prime borrowers, then they'll take your money. If someone else's rate is cheaper, they'll take theirs instead. You also limit the amount of money you're prepared to lend to a particular borrower - typically £10. So if they go bust, the most you'll lose from that borrower would be £10. If they all go bust, then you'll lose the lot. Oh yes. (But surely that's unlikely in these affluent times?)You can also choose to lend to people using Listings. This means you can read why they think you should lend them some money. They might want a holiday or a car or a facelift or something. If you think it's worthwhile then you can choose to lend them money. If you're sympathetic you can lend it at a low low rate. If you're money grabbing you'll lend it at as high a rate as possible and rub your hands with glee (until they go bankrupt).
The advantages of Zopa to lenders is you can get a better rate (on paper at least) than you can with most banks. Some banks are offering 0% rates on their current account. You can stick as little as £10 in Zopa and make more than double that! (yeah i know that 0% × 2 = 0% but I did say more than) So you can typically get several percent more than a lot of banks, but the danger is that you could get back nothing if all your borrowers lose their jobs. You can't lose more than you put in though, and so far I've made more than I've lost, so it's been OK, and it's a bit of fun really. I wouldn't expect to be rich from using the site though. It's all very much fun. Give it a try! What's there to lose? (oh apart from your money of course!)