Loan Exchange Website Enjoys Successful Year

Mon, 08 Mar 2010

Online lending website Zopa has seen its lending double in the last 12 months as consumers demonstrate their preference for alternative sources of funding. The website offers an innovative of lending, and indeed borrowing money. Dubbed the financial eBay, lenders invest any amount from £10 to £25,000 in the website, setting the interest rate at which they would be prepared to offer their funds. Borrowers, meanwhile, are grouped into bands depending on their credit checks, typically paying interest rates of between 9 and 13 per cent. The optional function of explaining to lenders what they need the money for adds a personal touch to the site.

The past 12 months saw £36.4 million of loans borrowed via Zopa, taking overall lending on Zopa to £70.9 million since it opened in 2005. Co-founder and chief executive of Zopa, Giles Andrews, voiced his belief that the credit crunch has encouraged people to borrow from alternative sources of funding, partly as a means of expressing their dissatisfaction with the ‘weird casino’ that is the banking industry. Zopa estimates the bad debt rate is about 0.7 per cent, while the charity PRIME guarantee 50 per cent of all loans.
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