ZOPA is known for establishing the first-ever P2P lending company in the world. Their website first went live in 2005, and they’ve spent years perfecting the peer-to-peer lending experience.
ZOPA is regulated by the Financial Conduct Authority (FCA), the Prudential Regulation Authority, and the Peer-to-Peer Finance Association. With so many years in the business, ZOPA is considered one of the most trustworthy names in the business.
The ZOPA P2P lending platform was created in the UK and has loaned out approximately £4,500,000,000 to borrowers.
For anyone who is considering investing with a P2P lending platform, this ZOPA review covers a range of topics to help you make an educated decision.
The word on returns
When it comes to returns, investors who work with ZOPA will see fine gains. Target returns reach up to as much as 5.2%, with interest rates ranging anywhere from 2-14%.
The average return at 5.2% is relatively low compared to other platforms in the UK.
There are currently more than 60,000 investors working with ZOPA.
While returns can be fruitful, investors should know that they likely won’t see huge returns unless they’re patient. ZOPA claims that some of the best results come from mid-long range terms that last at least 3 years or more.
It’s not a bad thing: investors are paired with lenders who they can trust to use their money wisely. Borrowers go through a thorough checklist that includes:
- Being a UK Resident
- Having a UK address for at least 3 years
- Good track record of paying off debt
- Average income of £40,000
Welcome to a diverse world
The ZOPA platform generally offers one type of loan, which is targeted at consumers. Although this might seem like it lacks diversity, the borrowers who are being provided the loans are using the money for all kinds of personal projects and ventures that prove to boost the economy.
ZOPA only accepts the British pound as currency, and they only work with borrowers and lenders in the UK. While this discourages other countries from taking part, realistically ZOPA has enough borrowers to manage.
The company still approves more than 300 loans per day.
ZOPA provides borrowers with loans anywhere between £1,000-£25,000 for their consumer needs. Terms range anywhere from 1-5 years, and borrowers can pay off their existing debt at any time without additional fees.
Time to face the features
Some of the beneficial features to consider with ZOPA include:
- Auto deposit: Ideal for investors who want to take a back seat, and who are confident with the potential of their investment.
- Secondary marketplace: Offers investors additional places to invest their money, while also offer the opportunity to sell your own investments to cash out early.
- Minimum investment: The minimum investment at ZOPA is £10, which helps to encourage more people to start becoming active in the investment industry. ZOPA takes even the smallest investments and places them in various accounts for optimal potential.
- Money deposit: Borrowers are required to use Direct Debit when paying off their loans; business and savings accounts are not accepted. While this might be a pain, it’s a necessary evil for ZOPA.
Investors, on the other hand, can move money around using bank transfers, standing orders, or cheques.
- Loan book: Investors are provided with a loan book, which can give them insight into how their investments are doing, and what they can expect to see returned each month.
- Website Language: To serve the greater part of the UK population, the website is displayed in the English language.
- Individual Savings Accounts (ISA): Investors can open up individual savings accounts, which allow you to earn tax-free returns on savings or investments.
You can put as much as £20,000 into your ISA, and any interest you earn is tax-free.
Is it simple enough to use?
The ZOPA P2P lending platform has had a lot of time to get things right. That means their awkward stage is well out of the way, and their website is kink-free.
Trust Pilot reviews have ranked ZOPA’s website an impressive 9.7/10, with more than 10,193 reviews supporting the user-friendly site.
Maneuvering through the website is easy, with large lettering, bold colors and a simple layout. The home page marks where borrowers and lenders will need to go, and there’s a whole slew of accessible information to help anyone get started.
Unfortunately, there’s no live chat to take advantage of, but their Facebook page has almost 10,000 likes and the team can often be reached through messaging there (they usually reply within a day).
Risks you should be wary of
While this company has been in the business for many years, there are still some risks to consider. The largest risk being that the company does not provide provision funds, and there are losses connected to that.
Is a borrower is not able to make their monthly payments, there is no additional funding to make sure investors avoid loss. Instead, ZOPA gets in touch with the borrower and works with them to help them get back on track.
It’s not a foolproof system by any means; however, if the approach didn’t work, there’s no way this company would still be in business after this long. Most clients either pay early or overpay, but there is still that risk.
This platform is for people who are confident with a less-than-secure return policy, and those who are just learning how to invest. With a very low investment minimum, lenders are safe enough if they aren’t lending out too much.