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Zopa Lending Review: Experience of a new lender

I wanted to review Zopa peer-2-peer lenders to see whether they actually are better than a standard savings account. Can you really make good money lending with Zopa? Check out my review.

I have started out small, just to dip my toe in the water.  So I transferred £100 to my Zopa account using online banking.

You are presented with two investment options. At the time of writing (August 2015) these were 2-3 year loans to borrowers giving you, the lender, 3.8% interest, or 4-5 year deals offering 5.0%.

Both options require you to have the re-invest option, also called recycling, turned on to achieve those stated interest rates.

There are no shorter period options like 1 month or 1 year.

With just wanting to see how it goes, I chose the 3.8% option.

The money arrived in my Zopa account within an hour. It immediately joined the New Money queue.

Zopa dashboardNew money gets invested after recycled money, thus giving existing lenders priority of reinvesting their returns over new deposits.

This seems fair enough. Existing lending customers get preference over new clients.

A progress bar shows you how far through this queue your money is. Your money is not loaned to borrowers just yet, it’s working its way towards the lending point.

Within 24 hours my initial deposit was at 99% along the queue, almost there.

Dashboard processingA few hours later I checked back and my money had reached the front of the queue and was now showing as processing.

Processing means your money is now in the pot being assigned to borrowers.

To ease your exposure to bad debts, Zopa will loan out small portions of your money to a range of different borrowers.

This means that if one of those loans turns into a bad debt, you should not be adversely affected due to the smooth running of the majority of your other loans.

Zopa dashboard money lentA few hours later and my initial deposit of £100 has now been loaned out to ten borrowers, each of whom receive £10 of my money along with various amounts of other peoples money.

Be careful you lot, I want my money back! 🙂

The terms of the loans are either 24 months or 36 months so this matches what I requested.

And if you dig into your loanbook you can see the individual borrowers and the details of their loans, your percentage of that loan, expected repayment amounts and dates, and many other details.

Let’s see what happens over the next few months.

Edit: A few days after opening my Zopa account I received a phonecall from a friendly guy at Zopa, welcoming me to their service and checking if I had any questions.  He also provided a phone number in case I needed to get in touch. Nice to know there are real people behind the website, even if it probably is a call centre.

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