Zopa, an online platform for peer-to-peer lending, has passed £250m in total loans arranged, having recorded 90% year-on-year growth in October.
The company now claims to account for 2% of all personal loans in the UK.
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Giles Andrews, chief executive of Zopa, said the numbers showed "increasing numbers of people are looking beyond the banks to find the best savings and borrowing rates", and claimed the average fixed rate of return on loans made over the past 12 months was 5.4% after charges and average defaults.
Money in the bank
As discussed at the recent Motor Finance panel discussion on the future of car finance, peer-to-peer lending, particularly that facilitated by the internet, appears to be on the rise.
Zopa claims the average personal loan arranged through its platform is 20% cheaper than that offered by banks while lenders’ returns beat those offered by savings accounts.
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By GlobalDataThe Zopa model charges lenders 1% a year of the money lent with borrowers paying a fee fixed by the amount and length of the loan.
All borrowers are identity-checked, risk-assessed and credit-scored (by Equifax, Experian and Callcredit) and borrow no more than £10 from any one lender, which the company says keeps the default rate at around 1% on unsecured loans.
richard.brown@vrlfinancialnews.com
