Loan sale fee
Paid by: Investor
What:

• 1%, charged if you sell loans before their terms end. So, if you sell £1,000 worth of loans, you’ll receive £990. The fee covers the cost of us finding new buyers.
• Fee is deducted from sale proceeds before these are passed to you.
• When you request a sale, we will also revalue your loans according to the latest market rates and repayment history. That might mean they are worth less than what you paid for them. Have a look at an example.

Loan servicing fee
Paid by: Borrower
What:

• This fee may vary across investment options.
• Fee is factored in before we calculate your target return and is deducted directly from each borrower repayment before it’s passed to you.
• This fee does not change your given target returns.

You are able to withdraw your funds at any time but remember that this investment performs best if you reinvest your repayments over 3+ years.

Sell your loans to other investors for a 1% fee

If you want to access money that is still invested in loans, you will have to sell these loans to other investors first. After you request a loan sale, we have to find other investors to buy them before you receive your funds.

Good to keep in mind…

• This is a good way to withdraw a larger amount from your investment.
• We charge a 1% loan sale fee and will revalue your loans according to the latest market rates and repayment history. That might mean they are worth less than what you paid for them. Have a look at an example.
• Selling can take several days as we need to find buyers.
• Loans in arrears cannot be sold.

Keep your monthly loan repayments

You can choose not to reinvest your incoming loan repayments so they remain in your Zopa account, ready for you to withdraw for free.

Good to keep in mind…

• This is a good way to withdraw a small amount from your investment.
• You can only withdraw at the pace of your incoming repayments.
• If you withdraw rather than reinvest your repayments, your initial 1% exposure to a single borrower could increase over time.

The minimum investment at Zopa is £1,000, enabling us to build you a sufficiently diverse loan book of 100 loan chunks.

Our investors tend to see Zopa as a part of a diversified portfolio of savings and investments. They typically hold around 10% of their wealth (excluding property) in peer-to-peer platforms.*

* Based on Zopa investor survey August 2018

Your Zopa investment is unique to you: your loan book is a little different to any other customer’s, therefore its performance will be too.

However, by investing for the mid to long-term (3+ years) and automatically reinvesting your repayments into new loans, you set yourself up for the best results.

• You make sure any interest received is put to use immediately by buying new loans, meaning you start earning interest on interest.
• By reinvesting in new loans, and doing this for a longer time, you continuously diversify your loan book, reducing the impact of any individual loan default.

The more loan chunks you have, the more likely you are to earn close to the target return, that’s just the laws of statistics at work.

Any capital losses you’ve made throughout a tax year, due to defaults, can be subtracted from the total interest you’ve earned when declaring your Zopa earnings to HMRC. This can reduce the amount of tax you have to pay.

You can also learn more via our guide to being tax-efficient with your Zopa investment. It includes info on using your Personal Savings Allowance and our ISA.

The target return we show is the net annual return we expect the average investor to earn. It is made up of a blend of the interest rates of the different loans you invest in, minus expected losses from defaults and our loan servicing fee (which is paid by the borrower).  Your actual return could be higher or lower depending on the rate of defaults.

We sometimes revise our target returns based on the latest market conditions. If you choose to reinvest your repayments this will be done at the latest target rate.

A 1% sale fee applies when selling loans early: this is not taken into account in the target return.

Zopa has been providing secured car finance to our loans customers since 2017 and opened them up to our retail investors in June 2019. These are the four main differences between secured car loans and unsecured personal loans:

In the event of default, we expect to recover more from secured car loans than we do on unsecured personal loans, because the loan is secured against the car.

A secured car loan is classed as defaulted after 3 months of missed payments, as opposed to 4 months on an unsecured personal loan.

With secured car loans, we pay introducers a commission to originate the loan. Zopa pays this commission up front and recoups it through the loan servicing fee which is why there might be a larger difference between the investor rate and the borrower rate than you’d see on an unsecured personal loan.

We class secured car loans as being in the ‘A-Secured’ or ‘B-Secured’ risk markets. That’s because we expect these loans to have similar default rates as our unsecured A and B profiles.