Zopa Review – Borrowing with Zopa

When it comes to borrowing money most of us just head straight to our local bank to ask for a loan. After all, this is what we’ve always done and what the generations before us did as well.

This is a fairly sensible approach and until recently it was probably the only way of borrowing money that I would have considered. However, the internet has provided us with a financial revolution in so many ways and now peer to peer lending is an option to be carefully considered.

Zopa is the biggest peer to peer lending site in the UK and it was also the first to get going anywhere in the world. So how does borrowing with Zopa work and what are the benefits? This is what we are discussing in this Zopa review.

The Way it Works

The first thing we need to understand is that the money you borrow through Zopa comes from a number of different lenders. People can sign up to either borrow money or to lend it. To keep things as watertight as possible the money a person lends is then split up into small chunks and loaned out to a number of borrowers. This means that you won’t be borrowing directly from one person but rather receiving the funds from a number of sources. Everything is arranged online and it is easy to track the progress of your account over time. To date over 80,000 people have borrowed in this way and more than 57,000 lenders have chipped in with money to fund those loans.

The Criteria

We are used to banks checking our financial details and running credit checks on us to make sure that we can be trusted to pay back a loan, so how does Zopa work? Well, the idea is very similar. To start the ball rolling you need to meet their eligibility criteria. This means being over 20 years of age and having lived in the UK for a minimum of the last 3 years. You also need to have a minimum salary of £12,000 and a good credit history. The criteria is very clear, so it should be easy to work out quickly whether or not you will be able to get the money you need in this way.

What You Can Borrow

Of course, we all have different borrowing needs. For instance, you might need quite a large loan to buy a new car, consolidate other existing debts or grow a business for example (Sole Traders Only when using Zopa). Or, you might just need to borrow a smaller amount to do some basic home improvements. The amount you can borrow from Zopa starts at £1,000 and goes up to a maximum of £25,000, so it should cover the majority of possibilities really. The repayment terms offer a high degree of flexibility, ranging from 2 years to 3, 4 or 5 years. Of course, if you are planning on taking out a loan then it is important to work out exactly how much you need to borrow and over how long you want to pay it back. Borrow too little and you risk having to go back and ask for more money. On the other hand, if you borrow too much then you’ll be paying interest on money you didn’t need and might end up paying more in interest. It’s important to know this before entering any loan contract.

Equally, it is also vital to choose the most appropriate loan term. If you try and pay it off more quickly than you can afford to then you could run into problems by over stretching your finances. The opposite situation is one where you take longer than you really needed to pay off a loan. In this case, you will pay back more interest than you really need to, as well as have the debt outstanding for longer than you would like.

While it is important to take into consideration the term of the loan, one positive aspect of borrowing money with Zopa is that there are no early repayment fees, giving you the flexibility to repay the loan early or make extra payments to pay down the balance of your loan without penalty.

Why Do It?

If you have always used your bank to borrow money then what would be likely to make you change over to an internet site offering peer to peer lending? Well, the first point to bear in mind is that cutting the traditional bank out of the process can produce more competitive rates of interest. If we can cut even a little bit off our interest rates when we have to borrow money then that has got to be a good thing.  After all, over a term of several years even a little bit of extra interest will add up. Since we don’t want to owe any more money than we absolutely have to, keeping the interest rate low makes sense. Other people might be upset or angry at their bank for problems such as what they see as being excessive charges. Again, with Zopa they do not charge you for making additional repayments or deciding to close the loan early. Whatever your reason is for looking at a new way of borrowing money like peer to peer lending, the modern approach adopted by Zopa looks as though it is definitely worth considering.


Peer to peer lending is a clever way of borrowing money which will hopefully lead lower rates of interest. The process seems slick and trustworthy enough to make giving it a try well worth considering. Zopa is well trusted by their customers, which is illustrated by them being voted most trusted loan provider in the Moneywise Customer Service Awards 2010 to 2014.

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