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Zopa Awards are Piling Up
Looks like it's money awards season, with the Zopa Awards cabinet needing extra timber to support the latest additions.
No sooner had I written about RateSetter's fair personal loans award than Zopa wins two other awards.
Zopa has beaten all the banks in the customer services and personal loans categories for the second year running at the Consumer Moneyfacts Awards 2015.
Zopa was the only peer-to-peer lending service on the shortlist, which, frankly, I find very suspect.
But that's not Zopa's fault! That's Moneyfacts' fault.
The fact is that Zopa's customers rate it very highly indeed. To win the customer service award, MoneyFacts' 70,000-strong consumer panel votes the winner.
The other award, best personal loan provider, is a mix of both the panel and MoneyFacts deciding the winner.
It's no surprise Zopa won there either, because it has better terms and conditions than the banks. It even does a “soft search” which means that if a borrower applies for a loan through Zopa then it won't leave a bad mark against your credit record. In contrast, the banks put their dirty smudge marks all over borrowers' score cards as a matter of routine.
With most bank customers saying they “hate” their bank, usually between clenched teeth, it might not seem much of an achievement for Zopa. But even allowing for that, it is a well-deserved reward.
But it's clear that Zopa's loyal lender and borrower customers like it for being the first P2P lending company in the world, combined with its great record.
Zopa suffers some complaints about lending speeds sometimes, especially in the Advent period when people are more into spending money than consolidating their debts.
Aside from that, Zopa's lender customers get just what they want and expect from it.
Since Zopa launched its bad-debt provision fund in 2013, none of its 50,000 or so lenders has lost a penny and they have all received the interest they were due. Since 2010, bad debts have averaged just 0.25% per year. These are extraordinarily low bad debts. No bank comes close. And they're mopped up easily by the bad-debt provision fund.
Zopa continues to have low acceptance rates (20% of applications are accepted) and it has low bad debts. With its long record of nearly ten years, it has the best opportunity to understand its borrowers and price loans accordingly.
Zopa is one of a few P2P lending companies to have a very low 4thWay® Risk Rating just slightly above the risk of savings accounts.
Zopa has averaged 5% interest rates, which is considerably more than you could have expected from bank accounts. It now pays 5.1% for lending for five years and 4% for lending for three years.
This is low compared to its competitors that are similarly safe personal loans specialists. Lending Works pays 5% over three years and 6% over five, and RateSetter nearly as much. But Zopa‘s lenders continue to be loyal, for the reasons outlined above.
The 4thWay® Risk Ratings were devised by experienced investors and a debt specialist from one of the major accountancy firms. The score is calculated using objective criteria that can be measured and improved over time, although no risk-scoring system is perfect. Read more about the 4thWay® Risk Ratings.
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