Zopa is a peer-to-peer lender – which means it offers personal loans to consumers using money from investors. It’s also a bank that is fully regulated by the Financial Conduct Authority (FCA).
Zopa is a digital bank which means it has no branches or paperwork. This means you can manage your account exclusively via an app – which may appeal to borrowers already used to managing their finances from their smartphone.
However, Zopa also has a call centre so it’s possible to speak to a representative and make changes to your account and on the phone.
But is a loan from Zopa loan right for you? From the interest you could be charged, to the likelihood of being accepted, we’ve got everything you need to know.
What’s on offer from Zopa loans?
Zopa offers fixed rate, unsecured personal loans which you can use to fund big-ticket items such as a new car, home improvements, a wedding, consolidating more expensive debt – among many other purposes.
Zopa loans come with the following key features:
- Borrowing between £1,000 and £25,000
- Loan repayment terms of between one and five years
- A fixed rate of interest which means your monthly repayments will remain the same during the term you have selected
- A ‘soft’ credit search which won’t impact your score
- The chance to repay the loan early and overpay as and when you can afford at no penalty
What interest rate will I get from Zopa?
Zopa offers several APRs (annual percentage rates) ranging between 8.7% and 17%, but the precise interest rate you’ll be offered depends on a number of factors.
- the size of the loan (the smaller the loan, the higher the rate)
- the length of term over which you choose to repay the loan
- your own financial circumstances
- your credit score.
It’s also worth bearing in mind that advertised APRs only need to apply to 51% of successful applicants, so the rate you are offered – which Zopa calls your ‘personalised rate’ – could be lower than 8.7% or higher than 17%.
And once you start paying the loan back, the rate – and therefore monthly repayments – is fixed for the duration of the term you selected. To get an idea of how much a personal loan might cost you, try our loan calculator.
How does Zopa stack up against other lenders?
The interest rates on Zopa personal loans tend to compare favourably to the high street banks, especially if you are given an APR at the lower end of its charging spectrum. In the past, Zopa has previously even offered the best personal loan rates on the market.
What’s a representative example?
A loan of £10,000 over 5 years will cost you £242.32 per month at a representative 17% APR. The total cost after 5 years is £14,539.18, which includes £3,499.18 interest at 12% fixed and a £1,040 fee. The total amount of credit is £11,040. The rate and fee you are offered will depend on your individual circumstances.
Does Zopa charge a fee?
Unlike many other banks that offer personal loans, Zopa charges a one-off non-refundable ‘origination fee’ – which it says is to help cover its costs. The exact amount of the fee varies according to factors such as the loan amount and term – but it will be set out in pounds and pence during the application process.
However, it’s important to note that the origination fee has already been factored into the APR, so what you see is what you’ll pay. APRs are a legal requirement among loan providers to make it easy for consumers to compare deals.
Who can get a Zopa personal loan?
Made the decision to apply for a loan? To be eligible you’ll need to be:
- at least 20 years old
- a UK resident with at least 3 years of address history
- employed, self-employed or retired with a pension
- on a gross income of at least £12,000 a year
- with a good credit history and track record of repaying debt (MoneySuperMarket’s Credit Monitor service will give you visibility of your score in advance so you can see what factors might affect your chances of approval)
Does Zopa loan use credit checks?
As with all loan providers, Zopa will carry out a credit search on you before it agrees to lend. However, one bonus that sets Zopa apart from many other providers is that it only uses ‘soft searches’ which don’t show up on your credit file to other lenders and don’t impact your credit score. This remains the case regardless of whether you are accepted or declined.
Are Zopa loans easy to get?
Because Zopa is a peer-to-peer lender which matches people looking to borrow with its investors, credit checks are fairly rigorous. The provider is clear that it does not offer loans for bad credit. However, the good news is you have nothing to lose by applying – once you’ve checked your chances of being accepted with our Credit Monitoring tool, Zopa’s own ‘soft search’ will protect your credit score even if you are turned down.
Note, however, that Zopa does not offer guarantor loans, bridging finance or joint application loans.
How quickly can I get the money?
If your Zopa loan application is approved, the money could be paid into your bank account in as little as five working days – although, as the peer-to-peer aspect of the loan means your loan requirements must be matched with the right investors, in some cases it could take longer.
Can I pay the loan off early?
Official repayment terms are between 12 months and five years. However, Zopa loans are flexible so you can repay them ahead of time without being charged an early repayment fee. However, you will not receive a refund on the origination fee.
How do I apply for a personal loan?
MoneySuperMarket is the perfect place to start. As well as being able to check your credit score first with our Credit Monitor tool, you’ll be able to compare loans from a raft of providers before making your choice.
During the online application process, we’ll need you to provide information such as:
- What you want the loan for
- How much you want to borrow
- How long you need to pay it back
You’ll also need to tell us about your personal circumstances, including:
- Your annual income
- Your employment status
- What outgoings you have
- Your address history
Once you’ve entered these details, we’ll run a comparison from a whole raft of loan providers and return a list of deals that could be suitable for you. Have a browse, click on your choice, you’ll be taken through to the provider’s website to make your application.
What’s Zopa’s own application like?
If you choose to apply to Zopa, the entire application process will also be online. Here are the steps:
- Choose how much you want to borrow and the repayment term
- Enter some key details – such as your name, date of birth, address and income
- Receive your personalised interest rate if you are eligible (this takes less than five minutes)
- Proceed to the application. You’ll need more details here, such as your address history and bank account numbers.