Zopa Lenders Beat Interest Rate Targets

Some Zopa news today, starting with the best bit: Zopa lenders are, on average, achieving higher rates than those projected by Zopa.

Lenders exceeding targets

Zopa removed its guaranteed rates at the beginning of this year, but its seems to be getting the hang of its new system of target rates

Zopa is currently projecting 5% returns for lenders choosing to lend for five years. Over the past four weeks, lenders have achieved an average of 5.11%.

In Zopa's three-year deal, it is projecting 4% returns. Lenders have achieved 4.22% on average.

Currently there is more borrower demand in the five-year deal, so that's the place to put your money if you want to get your money lent out even faster.

Zopa tie-up with Metro Bank

Metro Bank, founded in 2010 and the first new high-street bank in 100 years, has now started lending money deposited at the bank on Zopa.

While this could potentially impact the speed you lend your own money the impact is likely to be limited due to the way Zopa operates.

Zopa always lends individual lenders' money first. Only when that is all lent out on a given day will Zopa then lend any institutional money, such as from Metro Bank or investment funds, which is held in reserve to ensure borrowers can get their money.

The deal is particularly fascinating, because it is the beginning of tying P2P lending into the heart of the money system – called “fractional reserve” – which involves ordinary high-street banks creating new money by lending many times more than they hold in deposits.

We're not there yet though. Metro Bank, being new, is currently just lending half of the £3 billion that it holds in deposits, according to the Financial Times.

About Zopa

• 4thWay^® Risk Rating: 12. (Rank: 2=.)
• Annual interest rates: currently up to around 5%.
• Customer satisfaction: 97% (according to the Review Centre).
• You can lend in: consumer loans.
• First loans completed: in 2005.

Safety features

• Approximately 20% of loan applications are accepted. Low.
• Bad-debt provision fund is big at around 2% of outstanding loans. (Rank: 4.)
• No other special protections.
• Unsecured loans.

Lending, withdrawing and exiting details

• Easy auto-lend.
• Spread your money across dozens of loans within 12 months, with ease.
• Early exit fees of 1%. Plus, when Zopa transfers your loan parts to a new lender, you might have to compensate that lender if your loan parts are paying lower interest rates than those currently available on new loans.

Visit Zopa.

See more P2P lending websites like Zopa in Get Started With The Safest Peer-to-Peer Lending Websites.

4thWay^® Risk Ratings: no risk-rating system is ever perfect and they cannot consider all factors and future events. Read more about the 4thWay^® Risk Ratings.

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