What is Zopa?
Zopa was the UK’s first peer-to-peer lending website. It offers investment products where money is lent to UK consumers looking for personal loans.
It recently revamped its range of products, cutting them from three to two, and removing the protection of its reserve fund altogether. Previously it would cover borrower defaults from its reserve fund, but all new investors will now be exposed to defaults.
When you lend money through Zopa, it splits up the amount you invest into £10 chunks and spreads them across many different loans - meaning you're exposed to a very diverse tranche of borrowers rather than having all your P2P eggs in one loan basket.
Zopa peer-to-peer lender details
- Minimum lend: £1,000 (up from £10 in June 2017)
- Maximum lend: No maximum
- Lending term: Investors can choose from two investment products: Zopa Core, and Zopa Plus, which offer different levels of risk and return. The loans they invest in are for terms ranging from one to five years, but investors can withdraw money at any time (see below).
- Can I withdraw funds early? Yes, but you will have to pay 1% of total amount withdrawn on both products. You can avoid the fee by simply letting your loans resolve and not re-lending as they are paid off.
- Projected rate of return for lenders: 4% for Zopa Core, 4.6% for Zopa Plus (rates checked on 25 January 2018).
- 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. "NA" means not enough responses received to assign a star rating.
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 system.’
‘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're looking for higher returns you might want to consider other investments.