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TheCountOfNowhere

Zopa Peer To Peer Lending.

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After another weekend of looking for a savings account that offer more than 1.5% interest ( and failing ) I decided to turn to ZOPA.

I dabbled in it a few years ago and never lend out much ( if anything at all ).

However, the are offering 4.5% return on your cash over 3 years but the downside being they are not covered by the FSCS 85K (probably worthless ) guarantee.

Anyone used Zopa recently or any words of warning ?

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I don't use them, but understand that they have dramatically upped their game re security of lenders' finances in recent years. Any funds you transfer will be split between multiple borrowers, thus reducing the risks.

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I don't use them, but understand that they have dramatically upped their game re security of lenders' finances in recent years. Any funds you transfer will be split between multiple borrowers, thus reducing the risks.

When I used them the first time you had to manage everything yourself. Now they seem to have a sort of 3/5 year 'bond' type set up offer 4.5% and 5%

I'm going to give it a go I think. **** the banks.

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If you can hang on until next April, they should be regulated

But that's 6 months down the line. Depends how liquid you need your savings to be. I know 3 years is standard term for a loan, but the term puts me off.

Edited by Eddie_George

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Any funds you transfer will be split between multiple borrowers, thus reducing the risks.

It's not the borrowers that would worry me, it's the temptations for the company owners to pay out client funds to themselves.

A friend of mine worked at a major spread betting company that closed down for this reason.

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It's not the borrowers that would worry me, it's the temptations for the company owners to pay out client funds to themselves.

A friend of mine worked at a major spread betting company that closed down for this reason.

Which spread betting co was that?

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It's not the borrowers that would worry me, it's the temptations for the company owners to pay out client funds to themselves.

A friend of mine worked at a major spread betting company that closed down for this reason.

Was it WorldSpreads Limited?

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Which spread betting co was that?

WorldSpreads (=SportsSpreads), biggest one of its type in Ireland at the time I believe.

From http://www.bbc.co.uk/news/business-17426707

"Financial spreadbetting firm WorldSpreads has appointed special administrators following the discovery of accounting irregularities. The company said in a statement that as at close of business on Friday 16 March, the board of directors believed there was a shortfall of some £13m in clients' money."

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After another weekend of looking for a savings account that offer more than 1.5% interest ( and failing ) I decided to turn to ZOPA.

I dabbled in it a few years ago and never lend out much ( if anything at all ).

However, the are offering 4.5% return on your cash over 3 years but the downside being they are not covered by the FSCS 85K (probably worthless ) guarantee.

Anyone used Zopa recently or any words of warning ?

I got into Zopa and Ratesetter last year with a couple of thousand and now have £14K split between the two mostly on 3 years loans.

Thing I like apart from getting about 4% interest is that a large portion of the capital is returned every month...a shade over £400 on 14K. It comes in handy as I am on contract work and my monthly income is variable. The sites appear to be well run and both Zopa and Ratesetter have slush funds to protect against default, though both point out that these funds are not a guarantee and if everyone defaults then there is the potential to lose a lot of cash.

Don't forget to declare the interest on your Tax return which for a 40% tax payer reduces the interest to 2.4%..... still below inflation.

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WorldSpreads (=SportsSpreads), biggest one of its type in Ireland at the time I believe.

From http://www.bbc.co.uk/news/business-17426707

"Financial spreadbetting firm WorldSpreads has appointed special administrators following the discovery of accounting irregularities. The company said in a statement that as at close of business on Friday 16 March, the board of directors believed there was a shortfall of some £13m in clients' money."

Have they arrested and prosecuted the directors yet ?

:lol::lol::lol::lol:

I do like a good joke.

Edited by TheCountOfNowhere

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Have they arrested and prosecuted the directors yet ?

:lol::lol::lol::lol:

I do like a good joke.

WorldSpreads (=SportsSpreads), biggest one of its type in Ireland

One thing you have to remember with Ireland is that they do not enforce the law here except for car tax and fuel duty - anything else do what you like the Guarda don't care.

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There's a good article about peer-to-peer lending on MoneySavingExpert.com and Zopa gets some recommendations.

.

They also have a thing called a forum

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I have some savings in Zopa.

As mentioned above, you get some of the money back each month as people pay back some of the capital as well as the interest on the loans, so your money isn't totally tied up for the 3 years, but of course if you take this returned money rather than reinvesting it in the system then you are only getting your 4% on the remainder, not on the total sum because you've removed some of it.

Also if you did need to suddenly access the money after a few months you can opt to pay 1% and get it back almost straight away (in days I think) so that's like a get out clause but you lose 1%

They will be regulated by April (I think the guaranty figure if likely to be set at between £20K and £50K so then it will feel more secure than it does at the moment.

They also run deals occasionally when they require a load of new investment, where they give you 1% back on anything you up in between certain dates (so I put in an extra 5K and got 50 quid bonus. I know that is not a lot, but you could look at it like them giving you back the 1% that they charge you for fees (at the moment the rate is about 5.4% but they take 1% for fees so you get 4.4% rate. so bonuses are worth looking out for.

They also do an offer where if you recommend someone and then they lend £2K, you get a £50 thank you for that as well. So that could be worth doing for anyone with a partner as you could invest in two accounts and pocket the bonus. I know these are small sums, but every little helps I guess.

My only problem with Zopa is that you can see what people are getting the loan for. Mainly Home Improvements, Car and Consolidating Debts. Even the grade A borrowers have the "consolidating debts" box ticked, which worries me slightly.

More annoying is that amongst those there was someone who was borrowing £10K for a WEDDING, another borrowing £15K for a car (my own car cost about £900), 10K for a HOLIDAY HOME and another person borrowing 8K or so for a FECKING BOAT.

Probably no more annoying than the people that banks lend your savings to, it's just irksome to read individual loan applications and not have any control over whether you want to lend £20 to those people....

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There's an interesting piece in the FT today 'Big banks muscle in on peer-to-peer lending'

Not sure how similar Zopa is to the case studies in this article though?

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Guest eight

Have they arrested and prosecuted the directors yet ?

:lol::lol::lol::lol:

I do like a good joke.

I wish I had the nerve to start a ponzi. How do you get otherwise sensible people to part with their hard earned in such a speculative fashion?

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...

My only problem with Zopa is that you can see what people are getting the loan for. Mainly Home Improvements, Car and Consolidating Debts. Even the grade A borrowers have the "consolidating debts" box ticked, which worries me slightly.

More annoying is that amongst those there was someone who was borrowing £10K for a WEDDING, another borrowing £15K for a car (my own car cost about £900), 10K for a HOLIDAY HOME and another person borrowing 8K or so for a FECKING BOAT.

...

Different people have different preferences. Where is the problem?

You either save up for stuff and buy it later or you borrow and buy it now at a premium. There is nothing right or wrong with either - they are just different approaches.

All that really matters is whether they can pay the money back or not.

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I wish I had the nerve to start a ponzi. How do you get otherwise sensible people to part with their hard earned in such a speculative fashion?

Setting up auction rooms is a good method of extracting cash from serfs and then walking off into the sunset with the turnover. I know of one family who did this got away with over a million quid and now hiding out in Spain.

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Different people have different preferences. Where is the problem?

You either save up for stuff and buy it later or you borrow and buy it now at a premium. There is nothing right or wrong with either - they are just different approaches.

All that really matters is whether they can pay the money back or not.

That's simple....offer them a massive return on their investment. The greedy and the stupid wont be able to help themselves.

house.jpg

:rolleyes:

Edited by TheCountOfNowhere

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That's simple....offer them a massive return on their investment. The greedy and the stupid wont be able to help themselves.

:rolleyes:

"All that really matters is whether they can pay the money back or not."

If they buy something at a high price and end up spending the rest of their lives regretting it, it is up to them.

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It wasn't the things they were purchasing as much as that in my mind those things are purchased by people who are of the "I want this now so I shall have it" mindset, and I then worry about someone that impulsive actually paying the money back. But as has been pointed out, different people do different things and as long as they pay it back then that's fine. I guess loans generally are more likely to be taken out by people who "fail" the marshmallow test (would rather have something right now and pay more for it, than save up and get it cheaper) some people just don't do delayed gratification I guess! (which is good in a way as it gives zopa people to lend to)

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Oh I forgot to mention, in the other Zopa thread someone said that it was rumoured (or perhaps just stated as fact) that some people borrow £15K from Zopa to use as a house deposit. now that is something that upsets me. I don't own a house but someone is happy to borrow my money to "get on the ladder" thus pushing prices up even further out of my reach. Plus if the whole thing does come tumbling down, in which order are they likely to pay back the debts? Bank loan first, Zopa last?

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Oh I forgot to mention, in the other Zopa thread someone said that it was rumoured (or perhaps just stated as fact) that some people borrow £15K from Zopa to use as a house deposit. now that is something that upsets me. I don't own a house but someone is happy to borrow my money to "get on the ladder" thus pushing prices up even further out of my reach. Plus if the whole thing does come tumbling down, in which order are they likely to pay back the debts? Bank loan first, Zopa last?

I think that may be fraudulent. If I remember correctly you need to show where you get the deposit money from. I doubt that if you borrow from Zopa the bank will approve your mortgage.

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I think that may be fraudulent. If I remember correctly you need to show where you get the deposit money from. I doubt that if you borrow from Zopa the bank will approve your mortgage.

It's at moments like this that you ask yourself what has happened to Eric.

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