How lending money works
You can earn higher interest on your savings by lending money to the UK’s safest borrowers. Lending through Zopa is simple. You choose:
- How much money to lend
- How long to lend and your projected return
- What to do with your monthly repayments from borrowers
Once you’ve chosen these options Zopa matches your money in small chunks to many different borrowers and takes care of repayments.
Choosing how much to lend
You can lend as little as £10 or as much as you wish through Zopa. Your money will be lent in small chunks to many borrowers delivering you a good return on your savings.
You can continue to add money into Zopa at any time with a simple bank transfer. To see lots of interesting information about who you are lending to and how your savings are growing, it’s best to lend at least £2,000. That way you lend to at least 200 borrowers and will earn interest on a good range of different loans.
Choosing how long to lend for and your return
When you join Zopa you can choose to lend for up to 3 or up to 5 years with high interest returns available for each option. If you need to access your money quickly you can use the Rapid Return tool. The return that you receive is based on the tracker rates.
Choosing to lend at the tracker rates
The tracker rates give savers the tools to lend their money to borrowers quickly and at high interest rates.
Zopa borrowers are sensible people who shop around to find the lowest rate loan available. When you lend on Zopa you are competing with banks, building societies and other lenders who frequently change the personal loan rates they offer dependent on loan size, term and borrowers’ credit-ratings.
By choosing to lend at the tracker rates, the rates you are offering to borrowers will follow the UK personal loan industry and deliver you the best return available at any given time, by taking into account:
- Loan rates:
- The rates currently offered for different types of personal loans by UK banks, building societies and other lenders.
- Supply and demand:
- Whether the amount of money being offered by all savers through Zopa is enough to meet borrower demand.
- Rate threshold:
- A minimum threshold set to deliver a projected return that is always at least 1% above the average of banks’ savings rates on easy access and fixed term accounts.
Choose what to do with monthly repayments
Zopa isn’t like a fixed term bond from a bank. When you lend your savings you receive repayments from your borrowers every month. These repayments are made up of interest and the money you lent out.
You can choose either to re-lend the repayments to new borrowers for up to 3 or up to 5 years, so you are always earning high interest returns. Or to take your monthly repayments out of Zopa to use for other purposes.