- Jasmine: People who were told to think about their own mortality were more receptive to the idea of having cosmetic surgery than those who weren't (11th Jun 2013 - 18:05)
- Jasmine: @mcrcommuter Good point - it usually gets passed on to us (11th Jun 2013 - 17:49)
- Jasmine: @ajmajid Yes. I don't understand young people taking up smoking - makes no sense! (11th Jun 2013 - 17:48)
- Jasmine: effects of passive smoking on children costs the NHS £23m a year by causing 300,000 GP visits and 9,500 hospital admissions. (11th Jun 2013 - 17:41)
- Jasmine: RT @EdConwaySky: The financial nitroglycerine buried under the Bank of England. Quick blog: http://t.co/P18zbR4KtQ (11th Jun 2013 - 15:50)
- Jasmine: @pinkiejones Actually yes, they probably are! (11th Jun 2013 - 15:00)
- Jasmine: @iansearle lol! (11th Jun 2013 - 15:00)
- Jasmine: @photostrada Sadly, yes! (11th Jun 2013 - 13:28)
- Jasmine: @will_becker True! (11th Jun 2013 - 13:27)
- Jasmine: @pensionschamp Interesting! (11th Jun 2013 - 12:29)
- Jasmine: @neiljamesh Certainly looks like it± (11th Jun 2013 - 12:28)
- Jasmine: @emmalporter Yes, prob too expensive too (11th Jun 2013 - 12:27)
- Jasmine: 10% of secondary pupils think tomatoes grow underground (11th Jun 2013 - 12:27)
- Jasmine: 29% of primary school pupils think cheese comes from plants; 1 in 5 think main ingredient in fish fingers is chicken; (11th Jun 2013 - 12:27)
- Jasmine: @pensionschamp I wonder! (11th Jun 2013 - 11:57)
- Jasmine: @pensionschamp Good point! I'm slipping - yes, ultimately it will cost us! (11th Jun 2013 - 11:56)
- Jasmine: Not one office in the Shard is being rented; its only occupants are a restaurant and a viewing gallery (72 storeys empty) (11th Jun 2013 - 11:55)
- Jasmine: RT @liamdutton: A wet few days lie ahead as areas of low pressure form an orderly queue to the SW of the UK - http://t.co/iTGWklTamm (11th Jun 2013 - 11:55)
- Jasmine: Around 50 per cent of all whiplash claims arising from car crashes are fraudulent - costs the industry £1 billion a year (11th Jun 2013 - 11:50)
- Jasmine: RT @scaryduck: Vladimir Putin's getting a divorce. I think that's all his midlife crisis boxes ticked http://t.co/0tUQUpMRzF (7th Jun 2013 - 08:35)
Zopa: an alternative to banks and a recession-busting way to borrow money
Need a loan of £1,000-£15,000 with a no-hassle, competitve interest rate? If the answer is yes, then Zopa is definitely a good place for online loans. To follow on from Moneymagpie’s guide to lending with this financial exchange website, here is our definitive guide to getting a personal loan through the company.
- How Zopa works
- Who can borrow money and how much money can you borrow?
- What rates does Zopa offer for online loans?
- How to apply for a Zopa online loan
- How to apply for a Zopa ‘listing’ loan
The main advantage of Zopa is that you are cutting out the middleman and so you get a cheaper loan. Zopa stands for Zone of Possible Agreement, which is the area between the lowest amount one person is prepared to get for something and the most the other person is prepared to give for it. It’s basically how people negotiate a price between themselves.
“The rates on Zopa consistently undercut the best bank rates because it functions as a market,” explained Zopa spokesman Martin Campbell. ”That means it is almost cheaper by definition.” The reason for the name is that, on Zopa, you are borrowing directly from savers and so interest rates are not really set in stone, but are negotiated between borrowers and lender rather than set by a bank who wants to make big profits.
Zopa can also offer lower rates as it is not a traditional bank and so has none of the associated running costs. There are no branches to maintain, so Zopa has comparatively low overheads. The money saved is passed on directly to you.
Getting a loan from Zopa also only costs a flat-fee which is incorporated into the interest rate you pay. So you won’t have to pay any upfront fees. Also, a Zopa loan is incredibly flexible – there are no early repayment charges so if you are able to pay back the loan quicker you won’t get charged.
If you want to make money on your savings, it’s possible to get an enormous 8.2% on savings by becoming a Zopa lender (click here to find out how), but what does Zopa offer for those in need of a loan?
The advantages of a loan from Zopa are especially clear now that the current recession has taken hold. Sources of cheap credit are harder to come by even for normally creditworthy applicants: for example, some banks have begun to offer loans only to their own customers.
When you apply for a loan from Zopa, it is not actually Zopa you are dealing with and it is not their money that you will borrow. Instead, the money for your loan comes from savers who register as lenders on the Zopa website. The interest that you pay on your loan is then effectively the interest paid to these Zopa-registered savers on their money. The website simply charges borrowers a one-off, flat fee of £130.00 for arranging the deal.
The website therefore acts not as a lender itself but as a third party in a contract between lenders and borrowers. This means it is not regulated by the FSA (Financial Services Authority, the regulatory body for financial services) simply because the service falls outside the FSA’s remit. This made some analysts nervous at the company’s launch, but those fears have been allayed by the company’s success.
Zopa is not for everyone. Because the loans are unsecured, Zopa are only interested in lending money to those with a good credit rating, so if your credit cards are maxed out, you have CCJs filed against you or have a poor credit history then you won’t be approved. About half the loan applications received are rejected after Zopa’s credit and affordability checks. They will also confirm your identity and that you have a regular source of income of at least £12,000 per year.
However, if you pass all these tests, you are then free to borrow anything from £1000 to £15,000! The majority of loans are made for a period of either 36 or 60 months. It is possible, however, to pay back some loans over 12, 24 or 48 months instead. Even better, unlike at many high-street banks, there are no extra charges for early repayment, so early birds can make savings on top of the original low rate!!
The APR (the rate of interest you will pay, which is calculated to include the £118.50 charge made by Zopa) you will be offered will vary depending on four factors: how much you want to borrow, how long you want to borrow for, what day it is and what ‘market’ or ‘creditworthiness’ category you fall into.
- The lower the amount you want to borrow, the higher the rate is likely to be. This is because the more you borrow the more flexibility Zopa has in matching you up with lenders, leaving you with a lower rate. Also, the one-off fee that they charge is included in the rates. As this is £130 you can see that the smaller the loan, the higher the rate will be as a percentage of the loan.
- The longer the period you borrow for, the fewer lenders you will be compatible with so it will be more difficult for Zopa to match you up, leaving you with a higher rate.
- It sounds crazy, but the rates available on Zopa vary on a daily basis. It is part of the ‘negotiation’ process. The rate is calculated on the basis of the demands of the lenders who put their money into the system. As new lenders join, others update their settings and borrowers take out loans, so the number of lenders and the amount of money in the system varies, meaning that the final rate available to borrowers will change on a daily basis.
- Although Zopa only offers loans to those with good credit ratings, that does not mean that all borrowers have equal status. Instead, Zopa has a 5 tier rating system for prospective borrowers: A*, A, B, C and young. A* is the highest creditworthiness with C being the lowest. The ‘young’ category is separate and includes all applicants aged 25 or under. Applicants rated in the A* category generally receive the best rates whereas applicants from the slightly more ‘risky’ categories will be offered a slightly higher APR.
The cost of personal loans has increased substantially over the last year or so and, sad to say, Zopa is no exception. If you were an A* borrower and had taken out a loan of £5,000 over three years through Zopa in 2007 you would have typically been offered a rate of 6.7% APR. That figure today would be 8.0%.
On the other hand, Sainsbury’s Finance would offer the same loan today at 8.7% APR. First Direct would offer 8.9% (at the time of writing a cashback offer could reduce that to 8.1%). Despite the general increase in the cost of loans, Zopa continues to offer a market-leading rate. And with Zopa there will be no extra charges for default notices or early repayment – unlike with most other providers!!
1. Click here for the Zopa website and you will see this page. To apply for a loan, enter the amount you would like to borrow and the time period (36 or 60 months) in the orange
box headed “Get a Loan”. Once you’ve done that, click on “Get a Quote.”
2. You will be taken to the loan calculator where you will be prompted to enter the amount you wish to borrow and whether you wish to pay it back over 36 or 60 months. Then click “Get a rate.”
3. This screen (left) should then appear. If you are new to the site you will not yet know which market you fall into but this screen will give you an idea of what you are likely to pay. To continue, click “Apply for this loan.” (N.B. If you complete the application and are then placed in a ‘market’ that offers a rate you are unhappy with then you will still be able to cancel the application.)
4. If you are new to the site, you will be invited to regi
ster your details and then redirected to this screen (right), headed “Register as a Zopa borrower.” Enter your details on the form and then click next to go to subsequent pages which will ask you where you live your marital status, dependents etc.; everything you would expect to see on a normal loan application form. (N.B. The lovely people who you eventually borrow from will only ever know your username, your age and the county you live in.)
5. Once you have completed the forms you will find out if you are eligible to borrow through Zopa. If you are, congratulations, you are now free to take out a loan of up to £15,000!! Remember, don’t spend it all at once!!