Social lending gets ‘up close and personal’

For the first time in the UK, Zopa Listings allows individual borrowers to post their own specific loan requirements and circumstances for individual lenders to review and then bid against.

Zopa - the world’s first peer to peer lending service often called the “eBay of money” - has launched a completely new and more personalised alternative called Zopa Listings, building on the success of the existing Zopa Markets offer. Listings will allow individuals to ‘pitch’ online for the loan they want, giving details of what they are borrowing for, the interest rate they are seeking and their own personal circumstances. Lenders will for the first time be able to pick and choose between these individual borrowers and bid to lend to them, offering an amount and the interest rate they are prepared to lend at.

This new service offers a more individual and personalised version of peer to peer or ‘Social Lending’ and reflects Zopa’s commitment to the belief that people are better than banks.

Each Zopa Listing can include photographs and eventually a video, and will tell the borrower’s story in terms of what they want to borrow for and why. The Listing will also include all the necessary details - size of loan, over how long, a target interest rate, etc - along with all the information the borrower wants to offer about their circumstances to help lenders decide whether or not to lend to them and at what interest rate.

Lenders will then ‘bid’ on the listing – showing how much they would be prepared to lend and at what rate, until the listing closes. At that point, if the full loan amount has been achieved, it will go ahead at the aggregate interest rate of all the offers, subject to acceptance by the borrower. If the full amount has not been achieved, the process will stop there, although the borrower will have the chance to re-list if he or she chooses.

Lenders can bid with a lower interest rate offer to any Listing that has yet to close, even if the loan amount is fully covered – keeping the competitive process live until the very last second.

The launch of Zopa Listings – initially as a ‘beta’ project – will make Social Lending via Zopa even more personal and dynamic. Borrowers can provide as much information and evidence as they want, with the full opportunity to tell their own personal story to help find lenders who can identify with them and want to help them out. And lenders bidding will add a further dynamic element to the process, creating competition amongst lenders to offer the best rates they can. All of this will introduce an openness, transparency and market effectiveness that has never before applied when people seek to borrow money.

Zopa will continue to vet all would-be borrowers who want to post a Listing to ensure they are credit-worthy, prime market borrowers. This will help to protect Zopa lenders and maintains Zopa’s whole-hearted commitment to responsible lending.

Charges for the new service will be exactly the same as the existing Zopa Markets - successful borrowers will pay 0.5% of the value or the loan and lenders will pay 0.5% of the value of their loans per year, as an annual charge. There are no other charges whatsoever, including no early repayment penalties for borrowers wishing to repay their loan early.

Giles Andrews, Managing Director of Zopa UK said, “The launch of Zopa Listings is an exciting new avenue for our members, bringing new levels of individuality and personal control to Social Lending. Would-be borrowers will be able to make a very personalised request to our lenders for the money they are seeking, including photos and in the near future even videos. Zopa Lenders will be able to review all these Listings on the site and then bid on those they want to lend to, showing how much they want to lend and at what interest rate. The process of competitive bidding in this way will make Zopa Listings an equally efficient marketplace as our existing Zopa Markets service, but with even greater levels of personal control and choice.”

“Our launch comes at a time when more and more people feel let down or even failed by their bank and indeed the ‘old system’ as a whole. The results for our borrowers and lenders over the last two and a half years has proven that people are better than banks – that Social Lending can be a better alternative for people seeking to borrow, or to find a more attractive return on money they have saved. Zopa Listings adds new levels of individuality, personal control and choice, extending the appeal of this innovative alternative to the banks even further.”