Comments on: Zopa Launch Imminent

By: Monevator

Monevator — Tue, 04 Dec 2007 14:43:27 +0000

I have experimented with Zopa here in the UK. At the moment I’m getting loans away for about 6.9%, which is good, but they are nearly always going to people who say they need the money for “debt consolidation”.

These are AAA borrowers so hopefully they know what they’re doing, but still I think it’s a sign of the ongoing credit crunch and expect bad payments to rise as the economic troubles worsen.

Just over 5% looks a rubbish return to me, even with that guarantee. Maybe put $20 in to explore the site’s functionality, which is pretty clever and well designed.

By: Quotes

Quotes — Sat, 01 Dec 2007 15:12:23 +0000

I’ve used prosper a bit, and am very pleased. I can’t find any advantage for lenders on zopa. Like Neil said, I can walk over to my bank and get 5%. Or almost 5 in an online savings account!

By: Neil

Neil — Fri, 30 Nov 2007 23:03:59 +0000

The Zopa system seems like a neat idea. I would be more interested in it if there was a higher return rate though. If that ever gets bumped up to near 6% I might look into doing it. I can still get a 5.0% 1 year CD from my bank…we’ll see how long that lasts though.

By: Rob

Rob — Fri, 30 Nov 2007 22:17:37 +0000

Lazy Man:

Thanks for the article. Very interesting analysis.

However, I think there is still value to the overall person to person lending space in reaching some of those lenders who may be more willing to try the concept first through a product that is closer to what they are familiar with.

I encourage your readers to open a lender’s account at Lending Club, and I will award them $25 bonus after funding the account so that you can test drive our concept. [Editor's note: Prosper offers the same bonus. See the link on the right column of my website.]

[Editor: Link disabled. I don't believe comments should be openly promotional]

Our average rate of return to our lenders is currently 12.2% +

Best regards

Rob Garcia
Director, Web Production
Lending Club

By: Mike

Mike — Thu, 29 Nov 2007 21:02:05 +0000

I keep looking at this wonder what magic will be. If it quacks like a CD, it’s pretty much a CD. And if it’s pretty much a CD, Zopa is competing in an undifferentiated market. It’ll be tough going.

By: Fiscal Musings

Fiscal Musings — Thu, 29 Nov 2007 21:00:11 +0000

It doesn’t seem all that appealing to me. I would be after the higher returns which it doesn’t provide. I’m interested to see how the business model holds up (if it does). I’m not too confident in it though.

By: Lazy Man

Lazy Man — Thu, 29 Nov 2007 18:56:56 +0000

Keith, you have it right as far as I can see. The security of a CD is all that’s in it for you. And CDs have been widely available for decades.

MW, no more use than a regular bank CD would be a poor American. But at least it’s not less use than a regular bank CD.

I guess it’s something to make loans friendly, but is that something you really want to spend your time with? Most people want to think about their finances as little as possible. Why not buy a bank CD and go on being friendly with your local neighborhood or existing online connections?

By: FinanceAndFat

FinanceAndFat — Thu, 29 Nov 2007 18:40:31 +0000

I’ve had Zopa on my radar for a while. When I first heard about them it was more about making loans to people in a friendly way and a way to have terms defined if you are loaning money to a friend or something (not that that is wise in the first place). I don’t think the aim of Zopa was to make you rich, but to make loans more friendly somehow.

By: Minimum Wage

Minimum Wage — Thu, 29 Nov 2007 17:23:47 +0000

Looks like none of these are of much use to a poor American.

By: Keith

Keith — Thu, 29 Nov 2007 17:03:44 +0000

So let me get this straight, you lend money there (ie: buy a CD) and earn only 5.1%? Zopa then lends that money to someone and collect the interest rate difference between the 5.1% and whatever they pay based on their credit?

Well, if that’s the case, where’s the opportunity for me to make more than 5.1%? I guess the security of the “CD” would be the only incentive to me.