Social lending site 'rivals high street'
Published On 28 February 2007
One year after starting up, online lending and borrowing firm Zopa is seen as a significant alternative to financial providers on the high street.That is according to the head of personal finance at comparison website The Motley Fool, David Kuo, who described the company as "quite a big alternative to the high street banks".
He said the social lending site, which now has some 60,000 members, allows people with money to lend their funds to those without.
"Effectively what happens is, if you have a sum of money that you want to earn interest on, instead of depositing it in the bank you can deposit it with Zopa," Mr Kuo explained, adding that Zopa stands for Zone of Possible Agreements.
The firm then lends the cash out to various borrowers, so the lender's risk is spread around.
"So if anybody were to default you wouldn't be badly hit," he added.
And it's not just those with cash who could apparently benefit from using Zopa, as Mr Kuo insisted that borrowers could get a better deal that they would from high street lenders.
"You will almost certainly get a better rate of interest, simply because you are taking on the risk and cutting out the middle man," he concluded.
Zopa claims that through using its "safe" and "easy" service, lenders will enjoy better returns than saving accounts.
