Bypass the Bank...

Normally when someone wants to borrow money they will turn to their High Street bank or credit card to provide the funds. These methods can be costly and somewhat impersonal. What if they were able to find great deals from people like you and me who have some spare cash at hand? Well, now they can.

By joining Zopa they will be able to find sources of funding from other individuals. This is really one of those win-win situations we are always hearing about. The borrower is able to borrow money at very competitive rates and the lender is able to see a good return on their money with a good level of security.

The Zopa service has been around for a while now and is very well established. They have created different bands for people to borrow and lend in such that returns (and hence interest rates) are determined by the level of risk involved.

In providing such a service the company has hit on an idea that benefits everyone. The screening process for borrowers is thorough so you know that your money will not be lent out to people who are high risk. Also, the funds you put forward to loan are never placed with just one borrower (if you loan £500 it will be spread across at least 50 borrowers) so the chance of default is reduced even further.

Given the social lending aspect of the service you might be interested in learning some more about those who Lend and Borrow, I'm sure that you will see just how different the approach is when borrowing or lending money.

Please bear in mind that you should consider any tax implications on returns from money you lend and that there is a 0.5% annual charge levied by the company on money lent.

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