Lending company Zopa is celebrating its sixth anniversary with a year on year lending increase of 80 percent.
This is no ordinary lending outfit. Zopa cuts out the middle men – i.e. banks – by putting ‘lenders’ – who are really just other savers - in direct contact with borrowers. However, these savings are not guranteed and if a borrower defaults they will lose out.
Savers can earn around 7 percent on their money – more than a conventional savings account.
The company said: ‘The average return enjoyed by Zopa lenders over the last 12 months has been 7.6 percent, after charges but before any bad debt.’ It added that the default rate on Zopa loans is ‘the lowest of any unsecured loan book in the UK’ being just 0.7 percent.
Cofounder and chief executive of Zopa, Giles Andrews, said that banks were ‘resisting pressure to better serve the country’. He added: ‘Cutting out the banks is not only satisfying, these people are also enjoying much better rates on loans and on their savings by doing so.
‘There is vast scope for growth in this new and exciting arena, and we have every intention of taking much bigger bites out of the banks’ monopoly on personal loans and savings.’