Anyone invested with/have thoughts about Zopa?

[Rumbled]

Zopa

Potential interest rates seem too good to be true. What does the Mumsnet jury think? Risky? Only invest so much with them? How much?

All a bit new and different, which could of course be brilliant. Just difficult to know how secure it would be when it's not an investment vehicle we're used to and can't compare with similar.

Grateful for any thoughts.

Although there are sometimes people wanting 12 month loans, AFAIK, most of them are wanting to borrow for 3 or 5 years. Although 8% and up is possible, one is fixing the interest rate for quite a long time, and it does rather limit your options if you needed the cash back - while a deposit at a bank or BS will have strings attached to limit the options of withdrawing, it's not the same as having lots of 10 20 or 50 pound loans to lots of different people.

Some of the people offering to lend seem like sharks (very high interest rates) and I think they are rich wanting to get richer (as they can afford to wait for the full 13% or whatever to come back).

I would consider a small amount (say 2,500 to 5,000 - IE 10% to 20% of the maximum allowed without a credit licence) if you are considering this for some of your savings (and assumes this is less than 10% of total savings, so if it was a complete catastrophe it would not be as much harm done as say 25% or 50% - only giving a bleakest possible outlook despite bad debts shown on website as below 5% in nearly all cases).

Remember there is a 1% fee each year, so Zopa gets their money, and it comes out of your 'interest'. Also remember to declare it to HMRC (which may also have some bearing on how much to consider for loaning since you could make say 10% on 25000 and if you have to pay higher rate tax, it makes the benefit of this scheme somewhat less appealing).

Thanks, NetworkGuy. Helpful post. I'll think on it.

I have been investing in zopa for several years now and see it as less risky than stocks and shares but a way to get a bit more than the banks are paying for savings.

I would advise only lending in smaller amounts ie 30pounds to each individual, early on I was lending 200 or 400 pounds and you only need one of two of those to default and you end up with some serious bad debts.

However most people pay back earlier than the 3 or 5 yrs. I tend to take the highest rate I can as this helps to make a decent return and the wait isn't long to lend money.
Obviously its no good it you need the money urgently but mine is towards my pension so I keep reinvesting the profit and making it work again. Its amazing after several years how it mounts up.

I looked at it a few months ago and walked away. People are not scared of Zopa like they are of their bank or mortgage company. Don't pay, screw it, what can they do ? that is the attitude and you see how these people treat their friends who they have already burned with bad debts.

Read up on listings and you'll see how people have been burned. Most is debt consolidation which really means last chance saloon and overspending on your money !

I dont use the listings, in that way you are more open by just lending to one person.

I select which credit rateing i am willing to go with therefore you can chose A* which are people who have excellent credit ratings.

I got a few bad debts from the youth section which is for people with little credit history as under 25yrs but the interest was high at 13% so you still cover some losses but it is more risky.