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Zopa Exchange

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Has anyone used this borrowing/lending exchange?

There's a Q & A from the BBC: http://news.bbc.co.uk/1/hi/business/4325761.stm

Edit: Off topic I know, Mods feel free to move it to off topic. :)

about 6 months ago we had a thread talking about it, good luck trying to find it :lol: i think the jist of the thread ended in *undecided* some of our points of contention may of been worked out by now.

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I've been using Zopa, but only with £500 (their minimum deposit) to try it out.

My main problem with it is that your money sits dormant for a long time (earning absolutely nothing) while it's being matched to potentital borrowers. When it is matched, you are likely to get a rate that's a percent or two higher than keeping your money in a savings account... but your money is locked up for the duration of the loan (between 6 months and 5 years). You do get to choose this duration up front.

Then when payments start coming back, they also sit dormant for a long time, as you can only relend back into the markets once you've got another £500 lump. This means either waiting for the vast majority of the money to return to you (which might take 5 years!), or depositing more.

Withdrawing this dormant money is also a hassle... if you click on the 'withdraw' button, a message tells you that this feature is not yet available online. You need to contact a Zopa staff member by email to ask for your withdrawal.

When I first started using Zopa, I loved the concept, but was a bit annoyed that more of the details aren't available 'up front' (the main Zopa website is a big, detail-light advert for what lies beneath), and that you have to get to the stage of having an account set up and money in it before you can find out how it really works. I got off to a slow start with it (only about £20 of my £500 lent in the first month!), but then got the feel for setting realistic rates, and was lending out quite happily...

...but my biggest recent problem with it is Zopa has started offering 'bonuses' for people who lend out at a rate they specify. In the autumn, Zopa was launching an advertising campaign in national newspapers, and wanted to be able to beat high-street borrowing rates. So they gave a '2% bonus' incentive to people who were prepared to lend out money at 5% over 36 months. Borrowers would see this money as being available at 5%, while lenders would get the bonus, bringing them up to 7%. On the plus side, there was a hugh influx of new customers wanting to borrow Zopa money. But it doesn't seem to sit right with their idea of a free market, where lenders are free to set the rates they want... maybe I'm just bitter because it's driven the lending rates down in all the other markets!

Their very latest offer is to give out three bottles of champagne to any borrower who lends out £1000 before the 31st December. I wouldn't recommend trying to get this though! Finding potential borrowers takes about a week, and then some are bound to fail their credit checks (making your potentially matched money available to the market again)... in absolutely perfect conditions, I think it would take a few months for all of your initial money to be matched to borrowers. I started in the summer, and there's still £10 of my initial money unmatched.

Overall, Zopa is an interesting concept and I don't regret the money I've got in there. But I'm not in a hurry to deposit any more.

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