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Zopa Introduce Instant Access Option

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Zopa introduces “instant access” option

by Gill Montia

Story link: Zopa introduces “instant access” option

Zopa.com has introduced an “instant access” option for its savers.

According to the peer-to-peer lending marketplace, a new feature called Rapid Return allows lenders in most circumstances to access some or all of their money before their borrowers are due to pay it back, for a 1% charge.

Lenders at Zopa choose to lend over three or five-year periods and previously there was no option to access money lent out until it was repaid.

Zopa claims that the new facility means huge numbers of people, who by necessity have their money in instant access savings accounts, can now access the better returns available from person-to-person lending.

The average return on an instant access account is currently 0.79%, according to Moneyfacts, and the average return received by Zopa lenders over the last 12 months is 8.1% (after charges but before

any bad debt).

The firm’s co-founder and chief executive officer, Giles Andrews, says: “This new flexibility will have a huge impact on the range of people that Zopa can help to secure inflation-busting returns.”

He adds: “Fabulous news for longsuffering savers who have been stuck with the woeful, sub-inflation returns offered by all of the banks.”

The Rapid Return feature works through Zopa automatically finding other lenders who will take on the loans at exactly the same rate, leaving borrowers unaffected but making all further repayments to the new lender.

To protect lenders taking over these loans, no loan that has ever suffered a missed payment will be transferred.

This will perhaps provide a real competition to the banks and will perhaps drive interest rate to market level (which my guess it is higher than it is now)

(though zopa scale is very small compared to the banks, this will take time)

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This will perhaps provide a real competition to the banks and will perhaps drive interest rate to market level (which my guess it is higher than it is now)

(though zopa scale is very small compared to the banks, this will take time)

I am surprised no-one has responded to this. Has anyone had any dealings with Zopa, anecdotes to tell? This is somewhat tempting

Edited by FaFa!

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is this zopa backed by a guarantee to payout in case of failure?

In short, no

What happens if Zopa fails?

Zopa is run by a small team drawing experience from a range of industries including financial services. The team is backed by experienced investors, such as Benchmark (who backed eBay), Bessemer Venture Partners (who backed Skype), Wellington Partners, Tim Draper and The Rowland Family. So the risk of Zopa failing is minimal.

However, if Zopa did go out of business, the loan agreements would still stand because Zopa is not a party to any loan contracts; it only provides the mechanism for agreeing them. The repayments will continue to be collected by Credit Resource Solutions Ltd, the collections agency that is appointed by Zopa lenders to collect missed payments under the Zopa Principles. The costs of collections activity will not vary if Zopa has failed.

Debts assigned to P2PS Limited would continue to be pursued where possible and any sums recovered returned under the current principles as if Zopa still existed.

Any money that has been transferred into Zopa and not lent out is held in a segregated bank account at Royal Bank of Scotland. So if Zopa did go out of business, that money would be returned to the lenders.

http://uk.zopa.com/ZopaWeb/public/help/help-faqs-interested.html#regulated

Edited by FaFa!

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I lend £1000 through Zopa at the following rates

A* 36 8.40%

A* 60 9.40%

A 36 9.00%

A 60 10.10%

B 36 11.80%

B 60 12.30%

Y 36 12.90%

I don't lend in in the C 36/60 or Y 60 markets.

Total lent out £1,880.00

Capital returned £837.30

Currently my fund stand at £1,113.16 since the 16/01/2009 and so far I've had one bad debt of £9.87

I wanted to try it out and see how it worked, seems OK at the moment.

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Great stuff. My hesitancy about Zopa was due to the need to tie up cash for 3 years, and because I didn't think Zopa had a long enough track record to justify trusting them for that length of time.

I still want to do a bit more research into Zopa before putting money in, but it seems like the best deal going at the moment.

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Great stuff. My hesitancy about Zopa was due to the need to tie up cash for 3 years, and because I didn't think Zopa had a long enough track record to justify trusting them for that length of time.

I still want to do a bit more research into Zopa before putting money in, but it seems like the best deal going at the moment.

When they sort out ISA/SIPP investments it should become a massive player in the savings industry.

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That's a good point - how does this work in terms of tax?

I think you are supposed to declare the earnings for income tax purposes but not really sure on that.

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I lend £1000 through Zopa at the following rates

A* 36 8.40%

A* 60 9.40%

A 36 9.00%

A 60 10.10%

B 36 11.80%

B 60 12.30%

Y 36 12.90%

I don't lend in in the C 36/60 or Y 60 markets.

Total lent out £1,880.00

Capital returned £837.30

Currently my fund stand at £1,113.16 since the 16/01/2009 and so far I've had one bad debt of £9.87

I wanted to try it out and see how it worked, seems OK at the moment.

Hi spongeh,

I don't quite understand your workings. You say you lend 1000 but then say total lent out is 1880. I don't understand the difference but your numbers ARE different.

You say capital returned is 837.30 but your fund stands at 1113.1. What does this mean? Why is there a discrepency?

I'm interested in the workings and your experience of the service but with your post a lot of it doesn't seem to make sense.

Thanks

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When they sort out ISA/SIPP investments it should become a massive player in the savings industry.

Surely they would have to be FSA regulated to offer an ISA wrapper no? And that doesn't look likely.

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Hi spongeh,

I don't quite understand your workings. You say you lend 1000 but then say total lent out is 1880. I don't understand the difference but your numbers ARE different.

You say capital returned is 837.30 but your fund stands at 1113.1. What does this mean? Why is there a discrepency?

I'm interested in the workings and your experience of the service but with your post a lot of it doesn't seem to make sense.

Thanks

16/01/2009 I put £1000 pounds into a zopa account. When capital/interest is repaid to me I have two options, I can leave it in the holding account earning no interest or I can re-lend that money out to another borrower.

Some of the accounts have been repaid early and therefore I've only earn a small amount if interest on the time the money was lent out.

So I've actually lent

£1000 - Initial amount

+

£139.97 - Interest returned re-lent

£837.30 - Capital returned - re-lent

-£80 - currently processing

-£16.70 - Zopa Fees

=£1880.57 Lent out ... doesn't mean its outstanding.

As for the value of the fund

Not offered £0.33- You can only lend whole amount (minimum £5)

Fees not yet deducted £0.45

Offered £80.00 - Loan offered to someone that's waiting on acceptance

Lent out £985.05

Late payment £47.78

TOTAL £1,113.16

Bad debt £9.87 doesn't count towards your total as its lost :(

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I lend £1000 through Zopa at the following rates

A* 36 8.40%

A* 60 9.40%

A 36 9.00%

A 60 10.10%

B 36 11.80%

B 60 12.30%

Y 36 12.90%

I don't lend in in the C 36/60 or Y 60 markets.

Total lent out £1,880.00

Capital returned £837.30

Currently my fund stand at £1,113.16 since the 16/01/2009 and so far I've had one bad debt of £9.87

I wanted to try it out and see how it worked, seems OK at the moment.

You will be lucky to get any takers at those rates right now. Top end of A36* is currently 7.2%

I lend on listings, C & Y but limited to 15% of total funds lent out. That said I have havent any from listings in the late payers. No defaults to date although anticipate a few of my late payers will default.

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That's a good point - how does this work in terms of tax?

For most, it is treated as normal interest income and will be taxed at 10/20/40%. Bad debt is not tax deductible. So if you get £10 interest

and got £10 bad debt, you are still liable for £1/£2/£4 tax on the interest.

If you run it as a business then the bad debt will be deductible.

I tried it once on £1k and got all of them back plus interest (I only lend to A market). Have the money tied up for 3 years was what prevented

me from using zopa more. This instant option is brilliant.

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Sorry you may need your coat ... me no comprende!

You've obviously never experienced furtive guilt and the need to extract yourself before anyone cottons on.

Would it help you to know that I'm $18.87 richer - for very litte effort?

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You've obviously never experienced furtive guilt and the need to extract yourself before anyone cottons on.

Would it help you to know that I'm $18.87 richer - for very litte effort?

never explain your jokes, there are americans on this forum and you'll only encourage more with that kind of behaviour.

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I have about 25K on zopa. Been with them about 18 months.

The money is held by RBS until its lent out and then obviously held by the borrower. If zopa went bust they claim that the interest and capital repayments wouldn't be affected but I would foresee borrowers defaulting en mass. There is no compensation scheme and zopa can't be put in an ISA or SIPP.

Until recently it was difficult to lend more than 25K as it needed a consumer credit licence (CCL) but a few months ago this was dropped at about the same time as NS&I index linked was pulled. I think this caused a flood of money into zopa and the rates have tanked. I stopped lending in September.

Newbies pile in offering loans at 4-5% thinking its better than a building society but don't consider bad debt. When there is so much money at silly rates available it becomes less worthwhile.

Bad debts are not tax deductable. Bad debt estimation is historical and could become much worse than indicated if unemployment bites.

Regarding creating money from thin air - zopa doesn't. Money lent out is £ for £ the same money that lenders put in. No credit is created.

IMHO worthwhile for a non-taxpayer or basic rate payer if rates improve a bit from now. Not worthwhile for higher rate taxpayer.

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