Social Lending is two years old - Happy Birthday Zopa!

Zopa and its members celebrate two years of pioneering a better way to do money with a people-powered alternative to the banks.

Zopa (www.zopa.com) - the world’s first marketplace where people meet to lend and borrow money – is two years old today. Over this time, Zopa has helped thousands of members to secure a better deal on their money needs, proving that the innovative Social Lending concept wasn’t just a clever idea, it has worked extremely well in practice. The number of new members joining over Zopa’s first two years has also proven that people in the UK are increasingly keen on accessing the benefits it offers – a far better deal for borrowers and lenders and a more human way to ‘do money’.

‘People power’ may have once been a tired cliché, but increasingly it is driving some of the biggest changes in the way we live our lives, usually enabled by new technology. eBay has had huge impact on many retail markets; YouTube, MySpace, and blogging are forcing rapid evolution in publishing, news, music and the media generally; iTunes and the iPod have turned the music industry inside out, and Kiva is proving to be an innovative force for good in the third world. And now in personal finance, the Social Lending concept pioneered by Zopa is changing the consumer’s experience of borrowing money or seeking better returns by helping to make money human again. No longer forced to borrow from or deposit savings with a faceless financial institution, Zopa’s members benefit from borrowing and lending with fellow individuals, and getting a better deal as a result.

Although for many the initial attraction of Zopa has been the great rates on offer, its members have shown clearly that cutting out the Banks and helping people to help each other - to their mutual benefit - is a big part of Zopa’s appeal. Many of Zopa’s members find it a far more ethical and socially responsible way to handle their finances than the traditional routes they are becoming increasingly dissatisfied with. And in the wider population, research conducted last year by the Social Futures Observatory* found that 74% of Britons would consider either borrowing or lending money through an online Social Lending community, rather than use their high street bank.

Since Zopa launched two years ago:

more than 135,000 members have joined with a larger number of new members joining each month

Zopa lenders have received on average 6.75% p.a. returns, up to 14% p.a. (rates after fees and any defaults, but before tax).

Zopa borrowers have obtained loans at rates as low as 4.2% APR

Very few members have failed to pay back their loans – Zopa’s default rate is a tiny 0.2%
Zopa loans have consistently topped the best buy tables by offering borrowers the lowest interest rates available on loans (around 30% cheaper than the rest of the market)

Zopa has maintained a simple and transparent charging model: lenders pay an annual management fee of 0.5% on the money they lend, and borrowers pay 0.5% on the amount they borrow. There are no hidden charges or any form of early repayment fee.

James Alexander, cofounder and UK CEO of Zopa said: “The first two years have gone by very fast, and we now have a thriving community of lenders and borrowers which is increasing in number every day. Our members are proving that Social Lending works and that it is the breath of fresh air they’ve been looking for in their personal finance dealings. Borrowers and lenders are getting a better deal than they can get elsewhere and they enjoy a level of transparency and value for money that’s rare in personal finance. Risk has been successfully kept to an absolute minimum, reflected in our default rate of just 0.2%. People power is making a big difference to our members’ lives and that’s great! Our hope over the next two years is to grow our community as quickly as we can so that more people will benefit from the great rates and sense of social reward that our members have enjoyed over the first two.”