Just wondering if anyone out there has been using the social lending site Zopa at all.

It's not really a place for serious money and I've become concerned recently about the number of borrowers using it to consolidate existing debts. I've not had a single default so far since I started lending in March 2006 (even though lots of people warned that default rates would be huge) but I'm starting to wonder if a wave will hit soon. A lot of borrowers have been using the penalty free option to pay back loans early thereby cutting down the amount of interest charged.

I originally put in £1000 to play with.... Since Mar 2003 I've had:

a mere £35.52 in interest from borrowers.
a slightly larger £47.70 in interest from my holding account where money sits when it isn't lent out.
and a whopping £80 from recommend a friend deals!

Anyone else have any opinions on the place?

I looked at it and couldn't come up with any compelling reason to put money there rather than in a deposit account with a bank. The conclusion I came to was that, since it's effectively in competition with banks on the buy side and since credit terms are historically speaking very loose, there's no way to make much in the way of above average returns. It's a nice idea who's time may yet come but, right now, it doesn't quite work out right.

I seriously thought about getting a consumer credit license (pretty much automatic unless you have a criminal conviction) and going into the loan sharking business for a while but even at that end of the market rates are remarkably low at the moment.

Bump!

Just been discussing this with a colleague at work, search and found this thread, but only a couple of posts! Anyone else have any experiences of zopa use?

Have to say, Buy Toilet's stats have kinda put me off!

I have just joined Zopa and offered £12000 to lend to people.

I will let people know what take-up I get.

In the meantime I am getting 5% interest on it anyway, so I don't lose out by much if it is not actually lent out.

I looked into lending through Zopa about a year ago, but just like tbatst2000 I couldn't find any reason to get involved as the rates aren't much different from a bank account to justify the risk. It seemed like you had to start lending to the B/C graders to get any decent returns (but that was a year ago).

I think it is a nice idea and the risk is spread. but isn't that what they said about CDOs.

I do share your concern though about a wave of defaults in 2008. You can never be sure anymore about the measurement of risk associated with a certain borrower - its all been a bit too lax of late to make me feel comfortable.

Best of luck and let us know how you get on - you certainly have bigger cohones than me

I've got just over 5 grand lent out in Zopa. I like it because I can deduct my tax and fees and still get an ISA-like return but the only limit is how quick I can get the cash lent out.

I've been doing it since last february and so far have had one default due to the borrower dying. Zopa let me know what had happened and said not to worry. Now we wait for probate.

I also have concerns about defaults in the future. I am gradually reducing my exposure to keep a balance, but might put more in again if I feel flush.

I thought about it a year ago and couldn't actually see the point. The returns weren't much better than a high street BS bond but with risks.

Anyway, think about it. Where does the model come from. I'll give you a clue - tranches of debt, AA mixed with CC etc. Yep CDOs, exactly where the credit crunch all began. Barge poles out!