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Who are Zopa Loans Suitable For?

Personal Loans - Borrow Money at a Low APR

Feb 5, 2009 Asa Ghaffar

Zopa loans offer those with good credit the opportunity to borrow money at a low APR. Personal loans can be used for debt consolidation, home improvements or any purpose.

Zopa loans offers customers a lending and borrowing exchange. Whilst most borrow money from a bank, a Zopa loan is different because they would now be getting a personal loan from another Zopa member. Anyone approved for a Zopa loan is offered a low APR because they have a good credit rating.

How Long Can a Zopa Loan be Taken out For?

The term of a Zopa loan is either 36 or 60 months. However, it is possible to pay off a Zopa loan at any time should personal circumstances change. Whilst a low APR is offered to those taking out a personal loan, the best rates are offered to A* classified customers.

Age Criteria for Zopa Loans

Customers aged between 20 and 25 are able to get a Zopa loan, provided they meet Zopa's general borrowing criteria. The rate of APR will be slightly higher. Those under the age of 20 will not be approved for a Zopa loan as they have the highest number of loan defaults of any age group.

Zopa loan customers that are 26 or over will be broken down into the following risk categories: A*, A, B or C. Whilst all have a good credit rating, the lowest risk customers will secure the most attractive rates of APR on personal loans.

Taxable Earnings and Zopa Loans

In order to be approved for a Zopa loan, a borrower will need to have a taxable income of at least £25,000. As well as a moderately high gross income, anyone seeking to borrow money from Zopa will need to prove affordability. This means a low debt to income ratio in order to benefit from a low APR.

Zopa Loans are for Any Purpose

A low APR Zopa loan can be taken out for any purpose, including debt consolidation and home improvements. However, applicants are less likely to be approved for a personal loan if they have recently taken one out from another provider. This is due to a higher incidence of financial difficulties and resultant loan defaults.

Zopa loans provide a service for prestige customers. Those with a good credit rating and earning in excess of £25,000 per annum can borrow money at a low APR. Bad credit customers cannot borrow from Zopa. They can consider getting a higher APR unsecured loan to reflect the risk of loan default or even a home owner loan.

Those that found this article useful may also be interested in reading about the pros and cons of secured loans and avoiding loan sharks. A comparison of secured loans and unsecured loans will help someone decide which is the better option for their own unique personal circumstances.

The copyright of the article Who are Zopa Loans Suitable For? in Mortgages/Loans is owned by Asa Ghaffar. Permission to republish Who are Zopa Loans Suitable For? in print or online must be granted by the author in writing.