Zopa is a P2P (peer to peer) consumer lender. It is debt funding for individual borrowers. As an investor you are the lender giving money to the borrower.
Key facts and figures
Minimum investment: £10
Minimum term: Three years
Requirements to invest: Must be a permanent resident of the UK, over 18 and have a UK bank or building society account. Must also pay tax on earnings.
Cumulative volume lent: £1031m
Type of borrowers: Predominantly individuals, some sole traders
Money lent in last 12 months: £415,013,733
P2P market share % over last 3 months according to Liberum AltFi Volume Index UK: 22.05%
Returns (according to Zopa 30 April 2015)
- Today’s projected returns are 5.0% for lending over 5 years, and 4.0% for 3 years. The projected return is an annualised return shown after expected defaults. Returns are paid monthly.
- Register online via the Zopa website.
- Pick one of their products?
- Zopa provides an annual statement to make it simple to declare your earnings to the HMRC for tax purposes.
Getting money on the platform
- Can transfer to your Zopa account through online banking, telephone banking or in branch. Standard transfers usually take three to five days; faster payments are added the same day.
- You can also set up a standing order to transfer regular payments.
Do investors get a choice in who or what they invest in?
- No, once funds are deposited onto the platform they are placed in a queue to be matched to borrowers. Once your funds have reached the front of the queue they will automatically be lent out. They will be diversified into small chunks and matched to borrowers, with each borrower receiving a minimum of £10 and a maximum of 2% of any deposit. This process is all done by Zopa.
Investing your money
- Investors choose their market out of up to three years or up to five years and Zopa does the rest.
- Zopa divide borrowers into the following markets: A*, A, B, C1 and S (Business) for each of the lending terms (up to three years and up to five years). A*, A and B are also divided into small, medium, large and extra large loan sizes.
Monitoring your account
- Through the Zopa online account you are able to view how your funds are growing, view and download statements.
- There’s also information on how much money we are lending per day in each market. This enables us to gives lenders an approximate indication of how long they should expect to wait before their funds are lent out.
Understanding the risks
- Zopa undertakes stringent credit checks so only highly appropriate borrowers are funded. They claim their historical default rates are the lowest in the industry.
- As with any loan there’s a chance a borrower won’t repay. If a borrower misses a repayment, a collections team chases on your behalf. But if a borrower reaches a point where they are behind on their loan repayments by at least 4 months, Zopa has a Safeguard fund to step in and give you back your money, including interest owed. Though it’s possible that it might not always be able to do so.
- Safeguard fund total is over £8,167,316 and growing daily.
- Can withdraw interest as it is repaid each month, and can withdraw un-loaned funds which takes 3-4 working days.
- If you need to withdraw a lump sum or all of your money before it’s paid back by borrowers, then you can use their “Rapid Return” option for a 1% fee. This is also subject to being available to take over the loan.
Other interesting facts and figures
- Outstanding loans: £380 000 000 approx. at May 2015
- Most common reasons for loan: Car, paying off credit cards, home improvements
- Number of active investors: 51 000
- Interest returned to lenders Over £50 000 000