How does Zopa make
money?

Zopa makes money by charging lenders and
borrowers a fee.

Zopa charges borrowers a fee of £118.50 and lenders a 1% annual service fee. And that's it. There are no hidden charges, no additional costs, no sneaky clauses.

Borrowers

Borrowers pay a fee of £118.50. The fee is paid up front when the loan application is agreed.

A borrower taking out a loan of £5,000 would have the fee of £118.50 added to their loan amount. Because we only lend money in chunks of £10, an extra £120 is added to the loan and once the fee has been deducted, the borrower would get £5,001.50 paid into their bank account.

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Lenders

Lenders pay an annual equivalent 1% fee on the amount they lend to borrowers. The fee is accrued on a daily basis equivalent to 1% p.a. and deducted monthly from their holding account balance. They are not charged for money which has not been lent out.

Here is an example: A lender lending £1,000 at 7% would earn £70 of interest each year if the money is always lent out and paid back. They would pay a fee of 1%, or £10, in total.

We deduct the fee from the holding account balance on the 27th of each month.

If a borrower defaults on part of their loan, the lender is not charged a fee for that part - that would just be daft. And similarly, if a borrower repays early, the lender pays no fee on the portion of the loan that has been repaid.

And what do you get for your money?

Making loans happen

• The website is safe, secure and easy to use, and is open to lenders and borrowers 24 hours a day
• We match offers made by lenders to loan applications made by borrowers
• We take care of the contractual side of things between lenders and borrowers, so you don't have to deal with endless paperwork and legal documents
• We distribute the money between parties

Making things safe

• We use a company called Equifax to do an identity check on all potential lenders and borrowers
• Everyone looking to borrow is credit-checked and risk-assessed. Anyone who we feel is not creditworthy will be prevented from borrowing at Zopa
• People we're happy to let borrow at Zopa are put into either the A*, A, B, C or Young market. This allows borrowers to get a rate that's right for them, and means lenders can manage their risk level.
• We diversify risk by spreading lenders' money across a range of borrowers. When a person lends £500 or more, his or her money is spread across at least 50 borrowers
• Our underwriters individually assess each borrower's ability to repay before any loans are approved
• A collections agency chases any missed payments on each lender's behalf. This is exactly the same process that banks and other financial institutions use
• As thorough as we are, we always respect our members' privacy

Making it worthwhile for lenders

• Lenders get a whole new asset class. It isn't a savings account, it isn't an investment and it's independent from anything else in your portfolio
• Lenders can choose their rates and loan length, and whether they want to lend in the A*, A, B, C or Young markets.
• We provide information – including market data and expected levels of bad debt – to help lenders choose their terms

Making Zopa work

• Behind Zopa is a dedicated, passionate team of people who have done this sort of thing before
• Our customer service team is only an email away
• Our underwriting team comprises real live people (rather than just a bank of computers) who look at every borrowing application on an individual basis. They're highly trained and very, very good at what they do
• Our technology team are constantly looking for ways to improve the site. It's good already, but we're going to keep improving it and innovating
• Our marketing team works hard to spread the word about Zopa and actively seeks out lenders and quality borrowers. Because the more people there are at Zopa, the more people there are to lend to and borrow from – and the better it is for everyone.

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