Zopa – the Money Marketplace

You may be wondering what Zopa is. Well, it is the acronym for Zone of Possible Agreement and is the marketplace where people meet to lend and borrow money. It is a beneficial system for both parties where lenders get great returns while borrowers get low-cost loans. And with no banks in the middle everyone gets better rates. This system ensures that everything is safe, secure and legal.

Zopa was started in the UK by a group of experienced finance heads who believed there was a better way to lend and borrow money than everything already existent. Heading the way are James Alexander as the UK CEO and Tim Parlett as the CTO with the rest of the experienced money people which include members of the original EGG plc management team. Zopa is only open to UK residents, while its basic ideas are very similar to those of Prosper.

Basically, Zopa is simple, straightforward and completely transparent. To get started as a borrower, simply choose Borrowing from the top menu and you will be directed to a page intended for you to find out everything about borrowing from Zopa lenders and to get a quote. To borrow money here, you need to be a UK resident, your identity needs to be confirmed by Zopa and your annual income should not be under £25,000. On the Get a Quote page you can enter the amount (in sterling pounds) you want to borrow and for what period (from 12 to 60 months). You can also choose an additional insurance - Zopa Repayment Protection. After that you click the yellow Get Quote button to proceed. The system will immediately display how much you will need to pay monthly.

As a lender, you get a very good rate of 6.75% returns from Zopa compared to 4.8% for a savings account in Cahoot, for example. What’s better about the system, your money starts earning from the moment you transfer it into Zopa - money in your holding account earns 4.25%, and when it gets lent out to borrowers you earn even more. To reduce any risk, Zopa lenders only lend small chunks to individual borrowers. Borrowers enter into legally binding contracts with their lenders and repay monthly by direct debit. Zopa itself earns money by charging borrowers a 0.5% transaction fee and lenders a 0.5% annual servicing fee.

The website comes with a blog that is regularly updated with the company’s news. And if you have further questions, you may use the discussion board where senior members are willing to take you by the hand and show you how it works step by step.

In conclusion, Zopa is a zippy system where lenders and borrowers gather to perform their transactions with both parties benefiting. You don’t have to go to a bank anymore if you manage to pass their creditworthiness verification procedure.