Zopa Loans May Reduce the Cost of Borrowing
People Lending to People. Personal Loans for Low APR Borrowers
Feb 4, 2009
Peer-to-peer lenders, such as Zopa personal loans (in the UK) and Prosper personal loans (in the US) are enjoying considerable success. This is because they are offering competitive personal loan deals for debt consolidation and home improvements.
Who are Zopa Loans?
Zopa personal loans was set up by former directors of Internet bank, EGG. Zopa is a peer-to-peer lending and borrowing exchange that eliminates the middle-man. Zopa loans cuts out banks meaning that regular people lend to each other. The credit scoring process is identical to that used by the banks and they lend only to those with good credit scores.
How Much Will Zopa Loans Lend Borrowers?
Based on affordability, someone can get a personal loan for between £1,000 and £15,000. The term of Zopa personal loans is either 36 or 60 months. However, a borrower can repay their personal loan at any time should their circumstances change.
Zopa Personal Loans Lending Criteria -- A*, A, B, C Markets
- Age. All borrowers must be aged above 25;
- Income. Those wishing to take out a Zopa personal loan require an income of at least £25,000 per annum before tax;
- Electoral register. All applicants for personal loans must have been on the electoral register for any addresses lived at during the past 3 years;
- No recent borrowing. Zopa borrowers shouldn't have taken out any recent personal loans;
- No loan defaults. Anyone seeking a Zopa personal loan shouldn't have missed payments or have any loan defaults evident on their credit history. Borrowers with just a one-off late payment may be accepted for a Zopa personal loan.
Zopa Personal Loans Lending Criteria -- Young Market
- Age. All borrowers must be aged between 20 and 25;
- Income. Those wishing to take out a Zopa personal loan require an income of at least £25,000 per annum before tax;
- Electoral register. All applicants for personal loans must have been on the electoral register for any addresses lived at during the past 3 years;
- No recent borrowing. Zopa borrowers shouldn't have taken out any recent personal loans;
- No loan defaults. Anyone seeking a Zopa personal loan shouldn't have missed payments or any loan defaults evident on their credit history. Borrowers with just a one-off late payment may be accepted for a personal loan;
- Affordability. Borrowers aged between 20 and 25 must be able to prove affordability.
Business is Booming at Zopa Loans
According to Zopa, between July and September 2008 an average 3,700 borrowers joined each month. This represents a 48% increase in business compared to the first quarter of 2008. Sarah Kennedy, head of customer proposition, at Zopa said: "Clearly the tightened lending criteria at the banks is helping to drive borrowers to look for alternatives."
Those with good credit should see if Zopa can offer a personal loan. There are no restrictions on the purpose of borrowing so someone can borrow for home improvements and debt consolidation. The cost of borrowing is competitive so successful applicants will pay only a low APR on their personal loans.
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.
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