London (PRWEB UK) 27 May 2011
Now that no bank savings account in the UK can match boast inflation-beating credentials, savers need to look beyond the banks to protect their money from the ravages of rising inflation. One of the most attractive alternatives is lending at Zopa – the online lender that uses the peer-to-peer mechanism to offer market-leading rates to borrowers and savers. Zopa lenders are enjoying rates of return well above inflation.
At Zopa, savers choose the rates at which they offer to lend their money to credit-worthy borrowers. Zopa then automatically assembles the best deal for each borrower that passes its thorough credit checks from the money available from all lenders’ offers on the market, and the borrower simply says yes or no to that rate. The net result is borrowers typically obtain a rate 20% lower than the best they have been offered by a bank, and lenders enjoy returns that easily beat the best savings rates offered by banks and – crucially – inflation. The average return Zopa lenders have secured over the last 12 months is 7.3% after charges (but before any bad debt and tax).
Giles Andrews, CEO and co-founder of Zopa, said:
“Now that huge bank spreads and inflation have combined to make saving cash in a savings account practically pointless, savers must find an alternative to the banks unless they’re happy to watch their money evaporate in value. By lending to fellow consumers through Zopa, people can still enjoy inflation-beating returns while helping creditworthy borrowers looking to borrow sensibly. Everyone wins, except the bankers.”
More than £130 million of personal loans have now been arranged by Zopa – all at rates agreed between borrowers and lenders and with no banker involved. Zopa loans now account for more than 2% of all new unsecured personal loans being made in the UK. This market share is set to rise, especially as banks are now charging record levels for personal loans. The average interest rate on a £5000 loan from the banks is now 12.7% - the highest it has been since the year 2000 when the base rate was 6%, not the 0.5% we have today.
Zopa continues to operate the lowest risk unsecured personal loan book in the UK, with a default rate of only 0.8% of the funds lent since launch.
Notes for Editors
What is Zopa?
Zopa is the world’s first online marketplace where people meet to lend and borrow money. Lenders get great returns and borrowers get low-cost loans. With no bank in the middle, both parties get better rates. Zopa now has more than 500,000 members in the UK. To find out more, please visit http://www.zopa.com.
What’s in it for consumers?
Lenders are enjoying a smart way of getting a return, alongside their savings and investments. The average return on all money lent over the last year is 7.3% pa (figures are before tax and any bad debt, but after fees).
Borrowers are finding it a fair and human way of getting a low-cost loan. They are enjoying market-leading rates, with a typical APR currently of around 8.5% (based on £5,000 over 3 years in the A* market), and the flexibility to repay their loan early at no extra cost. Unlike the vast majority of banks, borrowers at Zopa get their full personalized loan quote without leaving a mark on their credit file.
Anybody can become a member of Zopa for free, giving them access to the Refer-A-Friend scheme where they can earn £50 for each successful borrower they recommend and each lender they recommend who lends £2000 or more.
Risks are kept to a minimum
To protect lenders' money, Zopa uses all the safety measures banks use, plus a few more. All borrowers are identity-checked, credit scored and risk-assessed, and anybody lending £500 or more has their money spread across at least 50 borrowers.
Zopa holds Consumer Credit Licences from the Office of Fair Trading and uses the same processes and fraud prevention systems as banks (including Equifax, Experian and Call Credit for credit rating).
Charges are simple, clear and low
Zopa runs a simple and transparent charging model: lenders pay an annual fee of 1% on the money they lend, and borrowers pay a fixed fee of £130 which is added to their loan and reflected in the APR figures quoted. There are no hidden charges or any form of early repayment fee.
A growing trophy cabinet
- Voted one of Britain’s 100 most exciting, promising and disruptive new businesses by Smarta100.
- Runner-up to Twitter in the 2010 FT ArcelorMittal ‘Boldness in Business’ awards for “Most Promising Newcomer”
- Winner of ‘Most Trusted Personal Loan Provider’ and ‘Best Personal Loan Provider for Service’ in the 2010 Moneywise Customer Service Awards.
- The Webby Awards - Best Financial Services Site 2008 and Best Banking/Bill-Paying Site 2007
- The International Retail Banking Awards - Most Threatening Non-Bank Competitor 2008
- The Banker Awards - Internet Project of 2007
- Red Herring 100 Award 2007
- CNet Technology Awards – Technology Project of 2007 and Internet Innovation of 2006
- Named by Business 2.0 as one of eleven disruptive companies “whose breakthroughs will change everything”, October 2006
- A five star review in What Investment magazine, the first time the publication has ever awarded a perfect score, August 2006.