Anyone here lending money using these sites now that Zoopa and RateSetter have both provided insurance against loss? What do you think and if you have used them what is your experience as a lender. 5% returns are not to be sniffed at in the present economic climate.
In principle it seems a sensible system and 5% is a good return. Who runs it, who regulates it and how safe is your money would be my concerns. The higher the return the greater the risk generally. I am tempted myself but also need to learn more before committing.
I have invested in Zopa in the past, but in real terms, the amount of effort required by me to get a favourable return outweighed any benefits.
I did suffer losses (not overall), but that really hammers your overall return and frankly, I can make more in the stock market than I can messing with peer to peer.
Zopa, like RateSetter has recently offered a guaranteed return, but as I'd already decided not to pursue this type of investment, I didn't study it any further.
They claim their underwriting is second to none, but I would dispute that, when they lent out some of my cash to projects that were obviously going nowhere. Ultimately, they need to turnover cash to make money and in some cases, in my view, their underwriting was dubious to say the least.
They also made changes to the system after the contract between me and the borrower were both locked in. Mostly, they were not in the lenders favour and for example, changes were made to bad debt recovery. Some were designed to lower API rates to make Zopa look more attractive. They also made changes to lenders fees which negated a promise made right at the start that lenders wouldn't pay fees. Who paid the price overall? Lenders!
Be aware, none of these peer to peer landing sites are covered by the Financial Compensation Scheme, so ultimately, you could loose everything you invest on these sites.