Have you heard of Zopa? Zopa stands for Zone of Possible Agreement and the aim of this internet company is to match small lenders and borrowers. Borrowers and lenders are put in touch with each other, thus excluding the traditional lenders who normally arrange the deals and saving money in the process.
Obviously growing in popularity, in just 18 months, Zopa have attracted over 88,000 members. Around two thirds of these are borrowers.
Lenders are happy with the arrangement because they have control over money lent and achieve a higher return rate than they would get with building societies and banks.
Borrowers benefit in that they are charged lower interest rates and the loan is flexible, in that there are no penalties of they wish to settle the debt earlier than the original term. This could prove helpful to people with irregular income and the self employed, who struggle to get loans from banks, but are often able to repay loans early, as cash flow alters.
Zopa is responsible for carrying out full credit checks on all borrowers and they are rated as A or B borrowers, depending in the results of the check. The difference in rates paid between these...
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