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What is Zopa?
Zopa is a lending and borrowing exchange where real people sidestep the banks to get a better deal.

- They offer loans of £1000 to £15000 for up to 5 years.
- They are also one of the only loan providers allowing borrowers to repay their loan early with no penalty or sneaky fees, so it's a really flexible loan.
- Zopa lenders also offer loans at some of the lowest rates in the market.

Unlike the high street banks, thyey've got no shortage of funds, so there's no crunch here!

Zopa (www.zopa.com) is the world’s first borrowing exchange. What we do is very simple: we put people who want to lend in touch with creditworthy individuals who want to borrow – and because there is no middleman, both get a great deal

Who created Zopa / who is it backed by?

Zopa was created by a core of the team that created Egg – including Richard Duvall (CEO, formerly the Co-creator of Egg) and James Alexander (CFO, formerly, Strategy Director at Egg).

Zopa is backed by Benchmark Capital (www.benchmarkcapital.com) – the people who backed eBay - and Wellington Partners (www.wellington.de)

How has Zopa performed since launch in April 2005?

• More than 24,000 registered members
• £3 million of offers on the exchange
• No missed repayments, no defaults, no fraud
• No issues with regulators
• Zopa mentioned in Parliament as a leading innovative FS proposition that meets the government’s financial inclusion agenda
• Partnerships with Paypal, Yahoo!, Interactive Investor
• Requests received to launch Zopa from 18 different countries (including US, Canada, Germany, Spain, Italy, Brazil, China, India, Australia)

What’s been said about Zopa?
“A new company - based in London not Silicon Valley - has decided to take on the biggest oligopoly in the world, the banks. Called Zopa (Zone of Possible Agreement) the new company is an amalgam of a number of business philosophies. It is where eBay meets credit unions by way of easyJet, the peer-to-peer movement and Betfair.”
Peer Pressure - The Guardian 11.03.05
“This week saw the latest twist on what's come to be known as the "eBay model" with the launch of Zopa - an online loans service that works in a similar way. Both sites exploit the internet's power as a matching tool - its ability to bring together geographically dispersed people with a common interest … the internet is the middleman, a valuable go-between that matches millions of individual buyers and sellers.”
If the world was run like eBay - BBC News website 10.03.05
“Unless you've had your head in the sand over the last few days, you can't have failed to hear about the latest dot-com phenomenon - Zopa.
It's authorised by the Financial Services Authority and has received the necessary credit licences to operate from the Office of Fair Trading.
In theory, it shouldn't work but in practice, even in these early days, it looks as if it might ”
Introducing the People's Bank - The Motley Fool 08.03.05
ZOPA’s impact as captured in the top tier media:
"Last year Britain's four biggest banks between them made profits of £23.3 billion ... British banks are the world leaders at confusing their customers and extracting extra charges" ... "why not use the internet to bypass banks ?" ... "Zopa is trying another idea: cutting out the intermediaries in borrowing and lending" ... "Whether it takes off depends on the number of people self-confident enough to go outside the usual banking channels. It has already seen interest from societies and minority groups that would like to lend to people within their own circle."
Is greed good? - The Economist 21.05.05

“The founders of Zopa hope the website will change the way people think about money, in the way Ebay has transformed the way they buy and sell things between themselves, rather than through financial institutions
The launch has been timed to coincide with the end of the reporting season for the big banks. They announced multi-billion pound profits but are accused of setting high interest rates”
How to borrow £25,000 from a stranger on the internet
The Telegraph 07.03.05

“This could be just the tip of the iceberg for Zopa. Borrowing and lending is the ideal launch pad for the site, this being the financial function consumers are most familiar with. However, in the future there is nothing to stop Zopa offering exchanges on, say, insurance, pensions... even mortgages. This is most definitely one to watch”
Zopa zaps the giants - Netimperative 17.03.05

“The 3-6-3 philosophy of bankers has not changed all that much in centuries: take deposits at 3 per cent, lend the money out at 6 per cent, and be on the golf course by 3pm.
Now a group of business people is launching a service to cut out the bankers. They have set up a website, Zopa, which aims to match individuals who want to lend to creditworthy individuals who want to borrow. By cutting out the middleman, both sides gain in theory ”
How to ruin the bank - The New Statesman 14.03.05

Why borrow at Zopa

• Cut out banks, borrow from people – and get a better deal
• Repay at any time – with no penalty
• No catches or traps

Why lend at Zopa

• Cut out banks – and get a better return on your spare cash
• Choose the rate at which you are willing to lend
• Lend to real (creditworthy) people
• Get monthly returns with interest

How competitive are the rates at Zopa?

Rates available at Zopa are highly competitive. Because the middleman (ie the bank) is cut out – both lender and borrower stand to get a great deal. And remember, it’s not Zopa setting the rates – it’s other people, just like you.

Show me this is true

OK. The table below has been taken from Moneyfacts (the UK’s leading independent and authoritative source of bank rate information www.moneyfacts.co.uk). It shows the rates available from every bank it covers offering a £3,000 loan over 12 months – and that’s rates on 93 different loans. As you can see the rates vary enormously! More excitingly Zopa lenders are offering Zopa borrowers one of the best rates in the market.

%APR typical on a £3000 loan, over 12 months

Source: Moneyfacts, Zopa “A” market, noon 5/7/05

And this is also true for other borrowing amounts

The Table below is also taken from Moneyfacts – and shows rates available at Zopa compared to those offered by the leading online and offline loan brands as measured by market share. It also compares Zopa loan rates to credit cards and overdrafts – as you may be thinking of consolidating your debt. Again, Zopa lenders are offering Zopa borrowers great rates.

NOTE: 12 month term. ZOPA rates are %APR typical variable; others are %APR typical

And at Zopa, you can repay at anytime, with no penalty.

You probably want some flexibility in your loan. For example, you might get a bonus, windfall or pay rise and want to repay your loan early. Now you would think repaying early would cost you nothing – after all you are paying the money back. Wrong – 81% of the 93 loans referred to above have early repayment penalties, typically costing you an additional 1 months interest. At Zopa, you can repay at anytime, with no penalty.

So is Zopa always the cheapest place to borrow?

No. From time to time, some competitors may offer promotional deals that are cheaper than Zopa. So if you can find a better deal good luck, but please take care as some of these great deals are structured to lure you in and may have hidden traps.

At Zopa, you can be certain that you are getting a highly competitive deal (if not the best) offered to you by other people, not a bank. Go on, cut out the middleman.