ZOPA (Zopa)

Member Name: buju9

Product:	Zopa
Date:	23/06/09 (118 review reads)
Rating:

Advantages: ousting the banks.

Disadvantages: people may default

ZOPA - full name Zone of personal agreement is a website which competes with the banks in lending out money to people in need. However ZOPA is a much safer way of doing this. The site has been running since 2006 and all the glitches have been worked out now.

BORROWING

I havent personally attempted to borrow but I can imagine that it is pretty difficult to be eligable to borrow money. There are 5 different categories which people fit into based on their credit rating, affordability and stability. These are A*, A, B, C and Young (age 20-25). This may appear as if C has a low credit rating however people in C actually have a higher credit rating than most people in the UK. The young category is for those who are possibly too young to have a credit rating.

IMPROVING YOUR CHANCES IN BORROWING

When trying to get a loan you must provide basic information like bank details, credit rating, reason for borrowing and your income and outgoings each month. However if you take a more personable approach and give more details like details on what your outgoings are then people will feel more confident you have your finances in order. You can also write a sort of plea for the money under your personal profile where you explain why you are borrowing the money and make people feel confident that you wont default.

LENDING

You can lend anything from £10 to £25, 000, anything above £25 000 you must ask ZOPA because they want to prevent big businesses taking advantage of the system. Lending out is easy you can decide on your exposure for each loan which can be a minimum of £10 but could be the full amount if you really want. When deciding to lend you have two options.

1. Auto loan - This is where you set your interest rate and maximum exporsure in each loan and just leave it, the site will do the rest, however setting your rate too high will mean people will undercut you and you could risk having your money lay dormant.

2. Hands on approach. - This is where you take a more practical role in your lending you can read the information that the borrower leaves and decide on how much you want to lend and at what rate. You can also watch the market and if you see that your offer is going to be too high then you can lower this.

DEFAULTS

ZOPA are very precautious over who money is lent out to which is why they have less than 1% default rate, something banks could only dream about. However in the event of a default from a lenders perspective your money is relatively safe, ZOPA take more precautions than a bank at ensuring your money is safe, they remain in contact with the borrower and create an action plan on what will happen. In the event of the borrower completely defaulting your debt will be bought off you at 10% of what you lent out at from a kind of debt collectors. This is why people tend to keep their exposure to a minimum on each loan because 10% of £100 is only £10.


COMMUNITY
The forum is always buzzing and if full of absolutely geniuses who have been on the site for ages and will happily answer any questions thaty you might have. You might have to ask them to simplify their explanations though, boxes of wine is often used to explain.

Summary: very good site