What is Zopa?


Quick Answer

Zopa is a peer-to-peer lending service based in the U.K., according to Zopa. Since 2005, people have lent more than £1 billion through the service.

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Full Answer

When a lender's money enters the system, Zopa automatically loans it out as a series of micro-loans to approved borrowers, explains Zopa. Borrowers repay the capital with interest each month. No more than 2 percent of a lender's money goes to any particular borrower. Zopa has a fund to protect against arrears and defaults.

After a lender collects enough repayments, Zopa automatically lends to new borrowers so that the interest earns money as well, states Zopa. The annualized expected return on money lent out is 5 percent.

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