Peer to Peer Lending

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The total amount of my cash in Zopla currently is £5k (lendable)
I've withdrawn £1.2k although none of that really helps you.

Just because there's £5k in there doesn't mean it's all used, or it could be used, i.e., that £5k could actually yield return on £10k if the it's loaned out twice in a year for instance.
 
Lucero said:
The total amount of my cash in Zopla currently is £5k (lendable)
I've withdrawn £1.2k although none of that really helps you.

Just because there's £5k in there doesn't mean it's all used, or it could be used, i.e., that £5k could actually yield return on £10k if the it's loaned out twice in a year for instance.
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Are you sure you've got your figures correct?
If it's loaned out twice then it has been paid back early, obviously you wouldn't get say 5.5% interest if they paid it back after 6 months.
 
That's what I find strange about these systems.

It's very difficult to get an actual "real" world return figure from people who are actually lending.... and as you can see from the website - even the "Great Returns" page only gives projected returns with no time frames.

I'm sure there very well could be a return of 9% with the riskier lendees, but this would be over a long payback period, and there's also a very good chance you would have a larger proportion of people defaulting on the paybacks.

It's really no different to gambling or dealing in stocks really.... it seems to just be a bit more work with less risk.

And if I lend say £5000 out - am i right in saying i wont ever have at least my original £5000 back until all the loans have paid back ? What if I need the money again quickly ?
 
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Heliospherez said:
That's what I find strange about these systems.

It's very difficult to get an actual "real" world return figure from people who are actually lending.... and as you can see from the website - even the "Great Returns" page only gives projected returns with no time frames.

I'm sure there very well could be a return of 9% with the riskier lendees, but this would be over a long payback period, and there's also a very good chance you would have a larger proportion of people defaulting on the paybacks.

It's really no different to gambling or dealing in stocks really.... it seems to just be a bit more work with less risk.

And if I lend say £5000 out - am i right in saying i wont ever have at least my original £5000 back until all the loans have paid back ? What if I need the money again quickly ?
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From my understanding you can sell your loans to others to get yor money back, but of course this will be at a discount to the amount you would have ultimately received.

I also believe its received gross so the returns look good but your dodging tax, and as this grows the tax man will take more and more interest. Just the same way as they have with traders on ebay now.
 
Lucero said:
The total amount of my cash in Zopla currently is £5k (lendable)
I've withdrawn £1.2k although none of that really helps you.

Just because there's £5k in there doesn't mean it's all used, or it could be used, i.e., that £5k could actually yield return on £10k if the it's loaned out twice in a year for instance.
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This is just wrong. I think you need to quote much more specific number as how you are describing defys mathmatics.

I have looked at this a fair but not actually done it, and I cannot see how you can possibly achieve any of the numbers you quote, and the numbers listed in examples also bear out your numbers are wrong.
(Personally the hastle of the tax by declaring it makes it seem too much hastle to me right now, it would appear to only be worth while when investing significant amounts since I do not want to dodge tax)
 
chipperhead said:
Are you sure you've got your figures correct?
If it's loaned out twice then it has been paid back early, obviously you wouldn't get say 5.5% interest if they paid it back after 6 months.
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From Zopa, so if the loan is paid back early he will get his interest upto that point, and nothing going forwards :

"3. Can I repay my loan early if I like?
Yes. At Zopa, unlike at other loan providers, you can repay early, or in lump sums, at no extra cost. Because Zopa calculate the interest on your loan on a daily basis, this means you can save yourself lots of money if you choose to repay early.

For example, a £5000 loan over 36 months at 9.0% APR would cost a total of £5695 if you took the full 36 months to repay. But if you made your normal repayments and then repaid the whole of the remainder after 12 months, it'd cost a total of just £5373 - saving you £322. If you repaid in full after 18 months, the total cost would be £5509, and after 24 months it'd be £5609. So you can see the earlier you repay, the more you save. And Zopa don't charge a penny for this facility. However, you cannot settle or make an extra payment towards your loan whilst your monthly payment is in processing."

Yes he would quickly get his interest and capital back, but not the whole interest upto the end of the original loan date.

Realistically the calculation is simple,
(Return after 1 year) / (amount paid in)
But, after 1 year the return could have been reinvested into other loans, may have been turned over a few times etc

The funds also need to be discounted back to present value as £1 is worth less in 3 years than it is today.

I am not saying its a bad scheme but its certainly got some pitfalls that people not really sharp financially will be "duped" into thinking they are making larger returns relative to elsewhere then in reality they actually are.
 
Decided after this thread to look a little more into this.
From the forums this was right at the top : http://talk.zopa.com/index.php?showtopic=8345

Basically the guy has discounted the rates charged for higher rate tax, fees and defaults.
Its been agreed by a few other investors as correct, so as I said before, if your going to be honest with the tax man its a lot less rewarding than it makes out.
The headline rate vs the real expected return after tax summary :

A* short 5.6 = 2.26%
A* longer 6.6 = 2.96%
A* short 6.1% = 2.06%
A longer 7.1% = 2.86%
B Shorter 8.0% = 1.3%
B longer 8.6% = 2.26%
 
[TW]Fox;23796607 said:
So what you are saying then is that again Lucero made some outlandlish claims that don't appear to be true? :p
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No comment ;)

I am making an assumption hes not declaring any tax for starters, since the interest is gross that he receives.
Zopa are very poor at mentining this fact. In fact I could not actually find it on their site, some other peer to peer lending sites are a little more open about it.
 
gillywibble said:
How does this scheme compare to a VCT?
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I would assume VCT will cost you more, but with higher returns long term.
But as with everything its risk so your mileage would vary.

I am not up on VCTs really but I assume (maybe incorrectly) you would typically provide significant capital to a VCT to make it worth them including you and not the £10 minimum you can deposit with Zopa.
 
robskinner said:
Decided after this thread to look a little more into this.
From the forums this was right at the top : http://talk.zopa.com/index.php?showtopic=8345

Basically the guy has discounted the rates charged for higher rate tax, fees and defaults.
Its been agreed by a few other investors as correct, so as I said before, if your going to be honest with the tax man its a lot less rewarding than it makes out.
The headline rate vs the real expected return after tax summary :

A* short 5.6 = 2.26%
A* longer 6.6 = 2.96%
A* short 6.1% = 2.06%
A longer 7.1% = 2.86%
B Shorter 8.0% = 1.3%
B longer 8.6% = 2.26%
Click to expand...

That's useful, cheers. I didn't have any time to look into it further yet, from what you've looked at, would there be anything to stop you using a company to do the "lending"?
 
robskinner said:
Decided after this thread to look a little more into this.
From the forums this was right at the top : http://talk.zopa.com/index.php?showtopic=8345

Basically the guy has discounted the rates charged for higher rate tax, fees and defaults.
Its been agreed by a few other investors as correct, so as I said before, if your going to be honest with the tax man its a lot less rewarding than it makes out.
The headline rate vs the real expected return after tax summary :

A* short 5.6 = 2.26%
A* longer 6.6 = 2.96%
A* short 6.1% = 2.06%
A longer 7.1% = 2.86%
B Shorter 8.0% = 1.3%
B longer 8.6% = 2.26%
Click to expand...

Thanks for posting this, whilst i'm not in the 40% would I be right in assuming the expected return after tax and fees would be only a fraction higher? My cash (instant access ISA) get's just 2%, and looking around the rest aren't much better at 2.5.
 
You miss the point, shock horror.

You can lend the full 5K out for 12 months at 5%
or
You can lend the full 5k out for 6 months at 5%
and
You can lend the full 5k out for the other 6 months at 9%

Mind blown? I thought so :)
 
Lucero said:
You miss the point, shock horror.

You can lend the full 5K out for 12 months at 5%
or
You can lend the full 5k out for 6 months at 5%
and
You can lend the full 5k out for the other 6 months at 9%

Mind blown? I thought so :)
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Blow our mind some more by calculating the return on each of your two scenarios over that 12 month period.
 
How have you avoided the fees Zopa charge?

I notice how far away those figures are from the £2500 profit you claimed to have received even after allowing for the fact you've had it invested for 3 years (Though you admit it wasn't £5k the entire time so the average investment for those 3 years will be lower).
 
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