Monday, January 14, 2008

Lending at Zopa

I thought I'd check out Zopa lending. It doesn't seem appealing to me, but I wanted to experience the process. Ponying up $500 for a one-year CD at 5.1% isn't the worst entry price to check out something new.

Sometime last week I started the process. Part of it is that Zopa has to open an account for me with a credit union to hold my CD. That process has not yet completed.

The actual process is relatively painless. All you have to do is to look at a list of borrowers (if there was a way to search I didn't see it) and decide which borrowers are worthy of your "help"

"Help" is interesting. It means that some of the interest you earn on your savings is in fact given to a borrower (who you may not know from Adam) and applied to lower their monthly repayment amounts.

At the least amount of help, your interest rate is fortunately not reduced from the nominal 5.1% offered, it is only if you decide to help one or more borrowers more that your effective interest rate is reduced.

Here's a screen of the minimum help:

If I were generous enough to sacrifice my entire earnings on my Zopa CD to the borrower, here's how it would have looked:

Anyway, all that remains now is to wait and see how long it will take Zopa and the credit union to finally open my account.

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