Peer to peer lending websites: Zopa review
2nd out of 3 peer-to-peer lending websites
Zopa peer-to-peer lender overview
Zopa was the UK’s first peer-to-peer lending website. In 2013, it introduced a central compensation fund that aims to pay out to lenders whenever a borrower fails to make a repayment. Like other sites, this fund is limited, so it could run out if lots of borrowers fail to repay. However, in common with RateSetter, Zopa has a 100% track record of covering defaults so far.
Zopa peer-to-peer lender details
- Minimum lend: £10
- Maximum lend: No maximum
- Lending term: Choice of three years or five years, although from mid-March 2016 lenders will no longer be able to choose term of loan. Instead they will be assigned a term of anywhere from one to five years based on available borrowers.
- Can I withdraw funds early? Yes, but you will have to pay 1% of total amount withdrawn on most products (0% with Zopa Access, launching mid March 2016)
- Average rate of return for lenders: 3.8% (three-year loan; after fees but before tax) or 5% (five-year loan; after fees but before tax. Rates checked 18 February 2016)
- Minimum amount you can borrow: £1,000
- Maximum amount you can borrow: £25,000
- Borrowing term: One to five years
- Can loans be paid off early? Yes, and without any penalty fees
|Zopa peer-to-peer lending satisfaction|
|Explanation of the risks|
|Variety of products available|
|Ease of use of the website|
|Clarity of information on the website|
- Star ratings out of five show levels of satisfaction for each category.
What Zopa's customers say about them?‘Easy-to-use website, easy to withdraw and invest, and good email reminders'‘Straightforward, and better rates than a building society. I have no cause to mistrust the sytem.’‘Good interest rate paid, but absence of FSCS coverage as on other savings remains a concern.’
Alternatives to peer-to-peer websites
If you're looking for a loan, it's worth checking out Which? Best Rate personal loans too.
In almost all cases you'll want to build up cash savings (in Isas or savings accounts) before considering putting your money into a more risky investment such as peer-to-peer lending.
If you are looking for higher returns you might want to consider other investments.
- Call the Which? Money Helpline - for help with any financial query
- Which? Investment Portfolios - we help you choose the right portfolio for your needs
- Which? Money Compare - find the best cash Isa to help make the most of your tax-free allowance
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