Comments on: I Borrowed Money On Zopa. Here’s Why…

By: Chrisfs

Chrisfs — Sat, 07 Jun 2008 16:06:27 +0000

Looking through their help files, it seems that if you get the 3.75% CD, you are giving some help to a borrower, but you can give more by lowering the interest rate on your CD.

By: Lazy Man

Lazy Man — Sat, 07 Jun 2008 15:50:06 +0000

I believe that you get the full 3.75% rate and that Zopa gives the interest from the difference that they make from the 8.5% I’m giving them. This is the way their CEO explained it to me. Thus it really is win-win… if you are interested in a 3.75% CD.

By: ChrisFS

ChrisFS — Sat, 07 Jun 2008 00:25:48 +0000

Correct me if I’m wrong, but the help for borrowers comes from CD holders pledging part of the CD interest to the borrower. So they don’t get the full 3.75% because part of it is going to reduce the interest on the borrower’s loan.

Sad to say I don’t think you’ll see negative interest. I’m figuring the people who are willing to forgo interest on a CD are looking for deserving people, and a well off person doing an experiment isn’t as important a need as someone who needs the money for school or a car to get to work or something.

By: Bryan

Bryan — Fri, 30 May 2008 21:03:59 +0000

The wife paragraph was hilarious! Loved it. If I ever did something like this I would need two such paragraphs!

By: Elias

Elias — Sun, 25 May 2008 20:45:24 +0000

Good luck with this experiment and let me know how it goes….I was always interested in the new P2P lending networks but hesitated to jump in. (i.e. Prosper)…

By: Lazy Man

Lazy Man — Sun, 25 May 2008 18:51:17 +0000

Good points, VMH… I talked with CEO (of the worldwide company, not just the US version of Zopa) and he implied that was most people get significant help. I don’t believe that to really be the case. I think the people that the editors highlight are getting the help.

So maybe I should have put up a sob story to appear to have the need for help? That really doesn’t seem to be reliable to me.

By: VMH

VMH — Sun, 25 May 2008 16:43:24 +0000

I am a lender on Zopa (and on Prosper). I tried to identify borrowers on Zopa who live in my area who appeared to genuinely need my help though the limited information makes that difficult. So I identified early 20’s who looked like they could use a break.

So the problem with your experiment is you seem to be doing OK for yourself and so why should I reduce my interest to help you?

I don’t mean that pejoratively but as a question for discussion. Do you intend this loan to be a form of payment for received value from the Lazy Man blog?

A person P2P lends for basically two potential reasons: He feels he can get a better return than other options or as some form of social (i.e. charitable) lending (or a combination).

Zopa by its structure is heavily weighted towards social lending. It appeals to be me in that I can help others with foregone interest rather than actual cash. As I said, you appear to be doing OK for yourself, why should I pick your Zopa loan versus one who appears to need the help?

By: Brett @ Personal Loan Portfolio

Brett @ Personal Loan Portfolio — Sat, 24 May 2008 06:47:45 +0000

@ Mrs. Micah: Several months ago, the average help was $22 per loan. To answer your question, I tried looking for the number on the website and could not locate the current average help.

By: Mrs. Micah

Mrs. Micah — Fri, 23 May 2008 19:25:58 +0000

I look forward to reading about it. It sounds like a strange system. I hope that besides your experiment they also release numbers on how many borrowers actually experienced negative interest and the average interest reduction through help.

By: Patrick

Patrick — Fri, 23 May 2008 13:50:05 +0000

Very interesting. It’s definitely not a high risk situation, and I’m sure it will be fun tracking it and making this work. Certainly not enough money to get rich from, but fun nonetheless.

By: Lazy Man

Lazy Man — Fri, 23 May 2008 05:33:35 +0000

In an ideal situation, the borrower wouldn’t have to pay back the loan because of the help they have… I don’t think you can get more help than you owe each month.

By: Cos

Cos — Fri, 23 May 2008 00:29:05 +0000

What exactly happens in a situation where you do actually reach paying negative interest? I get that it can eliminate your payment .. but once you go into the negative, what exactly happens with your Zopa account? Once the loan is paid off, likely early if there is more help coming in, do you end up with a chunk of money?

I get it, but I don’t get it.

Tnx, and good luck!

By: David Carter

David Carter — Thu, 22 May 2008 23:26:09 +0000

Hehe, you sound pretty worried your wife might not think its as good as an idea as you do. I like how you told her about it on the internet and didn’t ask first. You are right though it is a pretty small risk. I think experiments are usually worth it though. You are paying for the knowledge(and possibly earning for it).

By: Brett @ Personal Loan Portfolio

Brett @ Personal Loan Portfolio — Thu, 22 May 2008 21:36:20 +0000

Good luck with your loan. I hope you can pull off a great interest rate. For lenders, this is a great way to help a friend or family member with a purchase while not having to co-sign for them. By the way, I wrote some time ago about borrowers paying negative interest rates at Zopa. In the examples I found, a borrower was paying negative 24% interest. Absolutely amazing!