Zopa UK said it will introduce 'Young Markets' (Young36 and Young60) specifically for borrowers aged 20 to 25. The need for this arises from the fact that currently many applications are turned down - not because the borrowers have any negative marks on their credit history - rather they don't have sufficient history of debt.
Zopa will still check borrowers in this age group (identity, fraud, affordability, adress and employment). As long as they have no history of bad debt they will be approved for borrowing on the Young Market.
The new young market segment will allow Zopa to advertise the service focussed on young borrowers, which are internet savvy and open to the p2p lending concept.
Zopa UK has announced that it will remove the options to lend for 12, 24 or 48 months and concentrate on lending terms of 36 and 60 months. The changes apply only to money lend through Zopa markets not to Zopa listings.
Why are we making these changes? - Since Zopa began more than three years ago, more than 95% of your loans have been taken for a period of 3 years or less. - The popularity of larger loans repaid over 5 years is increasing, particularly since we introduced the new fixed borrower fee. - Almost half of our new lenders who sign up to Zopa do not become active and our hypothesis is that it is just too time consuming for them to make offers to all of our markets. - This allows us to simplify the marketplace considerably, while still allowing borrowers to repay their loan early with no penalty. - Because listings still enables all loan terms from 1 to 5 years, Zopa will continue to offer a wide variety of borrowing and lending options. - By structuring repayments over at least 36 months, we aim to encourage fewer borrowers to repay their loan early, maximising the interest you earn from each loan and reducing the period your money might spend in your holding account. This is because the loans that have been repaid early to date were mostly taken for 12 and 24 months in the first instance, so that borrowers had paid back a good proportion of their loan after just a few months. - We’re not envisaging that there will be any significant financial impact for Zopa from these changes. At most, we would earn 0.5% of the outstanding capital for a little longer if we can dissuade early repayment, but since we would hope that lenders would relend any funds repaid early anyway, we’re unlikely to earn anything more significant. These changes are purely aimed at simplifying our offer.
Lender reactions in the forums (19 pages of comments) are mostly negative. Some lenders speculate that this move is a necessary result of the new flat fee which was introduced earlier. Borrowers pay 94.25 GBP of the loan amount. For short term loans the impact of this fee on the APR is higher then for long term loans.
As there is no Zopa loan statistics site, it is not possible to track the Zopa growth daily. You have to wait for the instances where Zopa announces milestones.
Today Zopa - in an announcement to celebrate it's third birthday, said:
Since we launched in March 2005, £20 million in unsecured personal loans have been arranged at Zopa in the UK. More recently growth has been boosted by the global credit crunch which is driving unprecedented demand for P2P personal loans as banks become less competitive and tighten their lending criteria. All of this has also pushed up returns to Zopa lenders to an all time high.
At the current exchange rate that is approx. 40 million US$.
Zopa's new Zopa listings contain several pieces of information. Apart from the "basic information" which include loan amount, loan length, preferred rate, loan purpose, borrower ID, borrower signup date and listing end date, these are:
Credit score
The rating we give to the borrower’s credit score at Callcredit, a UK credit reference agency, relative to other Zopa borrowers
Affordability
Zopa rating (stars) for the borrower based on income and expenditure details provided by the borrower.
Stability
Zopa rating (stars) for the borrower based on details provided by the borrower, such as residence and employment.
Personal profile
Listing text supplied by borrower
Income/Expenses
Self reported detailed budget (see screenshot above for example) (more…)
British Zopa.com has launched the Zopa listings. The Zopa listing feature, of which the plans had been announced in August show individual borrower listings requesting loans. The concept is similar to the listings other p2p lending services like Prosper.com use. Read this earlier description of Zopa listings.
Prosper has confirmed that it will release new lender features over the next few months. Most important is an risk estimator that will allow lenders better to gauge the default risk when bidding. Prosper will use its own data from past loans to calculate the risk level rather then only rely on Experian data like in the past.
Intruders TV did a long interview with James Alexander of Zopa.com covering the development of Zopa, regulation, market approach, lender and borrower advantages, the competition and other topics. The video starts of with polling passers-by on the street whether they heard of Zopa and would use peer-to-peer lending themselves.
(Source: Intruders.tv) P.S.: Noticed the bulletpoint on the whiteboard "Sell loan on phone".
Lenders at Zopa do not (yet) select an individual borrower but rather select a market and a rate at which they want to lend their money. This is matched to borrower demand and if a match is found, money is lend out.
There is a 3rd party site tracking the development of the Zopa demand volume and charting it (daily, weekly, monthly, yearly). Recently the amount requested has gone down in most markets.
Tuesday I wrote about Zopa's plans for Zopa listings. Now a preview of how the new Zopa listings will look is available. With this feature Zopa will take the step from anonymous borrowers to a more personal look with borrower listings and profiles. To create a listing borrowers will have a credit grade of at least C.
I looked at the preview today and found the resemblance to Prosper.com layout striking in many points. The listing overview will look like this:
The loan listing itself has photos, a loan details section, a personal profile section and borrower information. Furthermore it will have a Questions and Answers Section allowing the lender to ask questions. Looking at the following example the forecast graph in the upper right looks exactly like the same feature Prosper offers:
The 8 page preview description gives more example screens of Zopa listings, which Zopa says it will introduce within the next months.
With this changes, should the Prosper & Zopa merger that Jeff & Heather wish (it is really only wishful thinking!) ever happen, then at least the layout question seems decided now.
That is how the new Sales & Product manager Tanya Cordrey of Zopa described the planned Zopa Listings yesterday in a Zopa Chat. Quote: "It is the ability for borrowers to post listings and it gives lenders the opportunity to lend choose individuals" Zopa plans to get this feature live next month.
The question about the chance for a secondary market was answered by that there is not enough volume yet (maybe next year). The chat was attended by many Zopa employees including the CEO. The transcript is available.
