Comments on: Zopa

By: Craig

Craig — Tue, 08 Dec 2009 16:05:02 +0000

Been good for me so far with a return of just over 10% after fee but before bad debt although return reduced a bit since holding account money stopped earning interest. I think i have been lucky so far as the bad debts are at the same level as the tell a friend rewards i have earnt, so for now i am still investing in zopa although i am constantly amazed at how low some people offer to lend money at and can imagine that a lot of them will never show a profit once the bad debts are accounted for.

By: Monevator

Monevator — Sun, 06 Dec 2009 11:01:59 +0000

I had three bad debts from my Zopa experiment, which on the sum invested was quite significant. But it is not statistically very meaningful, as I made less than 100 loans.

Interestingly two of the bad debts (maybe the third – I don’t recall for sure) were originated in the very same bad week in October last year.

By: David

David — Wed, 14 Oct 2009 16:57:29 +0000

The problem of late is the tax issue relating to the HMRC ruling on the treatment of bad debts. Like you Tim i have had some great returns from zopa but as my bad debts increase the tax treatment of them is starting to knock the returns.

By: Tim Bishop

Tim Bishop — Fri, 26 Jun 2009 21:45:32 +0000

Edd – good point about the Â£10 diminishing over time. I hadn’t thought about it that way, although it’d pretty damn obvious

From what I’ve read on the forums when the money turns to bad debt you’re unlikely to see any of it. They pass it on to their debt collectors, but I think they say you’ll only get a small percentage back, if anything.

Still, if you spread widely enough it should help lessen the blow. I guess it’s just easy to get worried by the bad stories others give on the forums…

Good luck with Zopa, it sounds like you’re doing well!

By: Tim Bishop

Tim Bishop — Fri, 26 Jun 2009 21:31:21 +0000

I just thought I’d follow myself up on this. I’ve noticed a significant improvement in rates recently, so I’m starting to put a bit of money in again. I’m still cautious (in life generally, actually), but I’m enjoying the process.

I still have concerns over the money being locked away for a minimum of three years. It’d be great to see a loans market, but I’m not really sure how that’d work.

By: Edd Turner

Edd Turner — Tue, 02 Jun 2009 13:40:54 +0000

A 10GBP loss would be the result of one particular person not paying back anything at all.

Lending out 10GBP over 3 years results in pennies a month, so the lender’s failure to pay back would be noticed very early on, before you even lost 10GBP.

I guess then Zopa would take steps to ensure you got itâ€¦ (but I don’t know what because it hasn’t happened to me yet).

I see Zopa as an attractive home for the cash element of my portfolioâ€¦

By: Tim Bishop

Tim Bishop — Tue, 02 Jun 2009 13:34:35 +0000

Edd – it’s good to hear of people getting good results. Presumably you pay a lower Zopa fee? I’m nervous of the big dent a bad debt could make. It only takes a few Â£10 loses to seriously erode any profits.

Also, when I looked a few weeks ago, rates at the top end were being pushed quite a way down by much more supply than demand.

It’s definitely a great idea, and I’ll continue to dabble, but for now at least it’ll remain an interesting experiment for me rather than a serious investment vehicle.

By: Edd Turner

Edd Turner — Thu, 14 May 2009 20:18:13 +0000

‘Personally Iâ€™m probably not going to get seriously in to Zopa’

That’s a shame – why not?

After nearly 3 years of problem free service I’ve got more than 3x the return of a high street bank and not lost a penny though defaults or bad debt.

I look forward to the day I can offer up my under-performing SIPP through themâ€¦