P2P-Banking.com

The borrower who receives the 10,000th loan from Zopa UK will be lucky - it will be an interest free loan.

Furthermore Zopa has a referral promotion in July. Zopa pays 100 GBP (approx. 165 US$) to members that refer a borrower who successfully gets a loan in July.

The growth of the disbursed loan volume has risen sharply at Zopa UK this year, while the average interest rate is 1-2 points lower than last year.

(Chart by sl75, source)

Giles Andrews on building Zopa, it’s brand and differentiating from banks.

Zopa has run a member competition, asking members to explain how Zopa works for a borrower or a lender.

I watched several of the created videos. My favourite is the video below by Glenmation.

No, that is not a typo in the headline. British Wonga.com offers small, short term loans online (short term= from 5 to 30 days).  The main advantage they advertise is, that the loan amount is transferred to the bank account of the borrower within minutes of the application, if approved. For that quick service Wonga charges 1% interest per day (!) plus 5.50 GBP transfer fee. According to the website that translates to an typical APR of 2334 percent.

British laws must be very liberal to allow this. In many other European countries interest rates like this would be illegal under consumer protection laws against usury. But Wonga does have a consumer credit licence from the Office of Fair Trading.

And naturally Wonga does not see itself as a loan shark. Read here, why they think their rates are appropriate. I do pity the borrowers that borrow at that interest rate.

EDIT: Interview in the Guardian with Wonga founder Errol Damelin states that Wonga had 50.000 customers during the testing phase.

EDIT Feb. 11th: See the comments for a discussion with John from Wonga.

(Photo credit: Demi-Brooke)

Prodigy Finance has an elitist approach. Only MBA students of selected schools are eligible as borrowers:

We have built our model with the specific profiles of top international MBAs in mind. Our close partnerships with the schools means that we are able to approve the vast majority of applications and are able to lend to participants from most countries (…). Provided you are accepted at one of our partner schools, it is very likely that we will be able to approve your loan in principle. However at this stage it is important to remember that we are still in pilot stage and thus our ability to provide funding is limited by the size of the funding pool that we have.

But that’s not all. Lenders are required to be alumni of the school, too. Minimum investment amount is 10,000 Euro. Loan term is 7 years with a 16 to 18 month grace period. Interest rates are tied to the underlying base rate.

Currently only  borrowers and lenders from INSEAD are accepted.

The interesting part is that Prodigy Finance aims for cross-border, multi-currency lending:

The currency of the loan balance is determined by the currency in which tuition fees for the university are paid. If you are only lending to one university, your funds will be held in that currency alone. If you choose to spread your funds to other universities, we will convert your funds at the best available rate (and with your consent).

Prodigy Finance was founded by Cameron Stevens (CEO), Ryan Steele (COO) and Miha Zerko (CTO).

As the end of 2008 approaches here is a look back on the highlights of peer to peer lending news in 2008:

• February: Gartner predicts that by 2010 social lending captures 10% market share; p2p lending in Poland takes off; IOUcentral launches in Canada - only to be suspended by regulator a week later
• April: Lendingclub enters quiet period for SEC registration; Cashare launches p2p lending service in Switzerland; Prosper goes national with 36 percent max. interest rate - partnering with WebBank; Zopa UK reshapes markets - concentrates on 36 and 60 months loan terms
• May: MyC4 has new interface and shifts currency risks to lenders
• August: Zopa UK launches young market; Maneo launches p2p lending services in Japan
• September: Kiva repayments are now immediately available for reinvestment; Zopa grows in Italy - has secondary market
• October: Loanio launches in the US; Friendsclear launches in France; Smava raises more venture capital; Zopa US closes; Veecus launces p2p microfinance; Lending club comes out of quiet period and introduces secondary market note trading platform; Prosper enters quiet period for SEC registration; Kiva wins grant; more than 685M US$ p2p lending volume; two funds will invest more than 2M Euro in Africa through MyC4
• November: 50 million US$ Kiva loans reached; Comunitae gets funding; SEC orders Prosper to cease and desist; Loanio suspends operations
• December: Class action lawsuit and other legal troubles challenge Prosper

Zopa reached 25 million pounds in loans. Zopa states cash depositers received an average 8.3% return after charges at a default rate of 0.04 percent. (Sources: Zopa, Financial Times)

Zopa UK has raised fees for new lenders to 1% (annual of capital outstanding). Old lenders continue to be served at the 0.5% fee.

Following through on the announcement (read: Zopa UK plans Young Market to target young borrower) Zopa has launched this market segment. Zopa says, it will help young adults, aged 20 to 25 obtain a loan, which otherwise would have difficulties - not because they have a bad credit history but because they have little or no credit history.

Zopa lenders can choose to make offers to these young applicants, with the added attraction of being able to charge a higher rate of interest because of the higher risk that these as yet unproven younger borrowers represent. So whereas the safest borrowers coming to Zopa can typically get a 5000 GBP loan over 3 years at around 8.5%, Young Market borrowers will be able to get the same loan at around 12.5%.