Zopa is the first international peer-to-peer lending company, with operations in the U.S., the United Kingdom, Italy and soon Japan. And it's the only one that never presents a risk to the lender.
No, your eyesight isn't failing. Lenders invest in a loan by buying a one-year certificate of deposit, for a minimum of $500, that pays 3.75% interest. That's a better rate than the average one-year CD. CDs are insured for amounts up to $100,000.
It works like this: You're given 0.1% of the amount of your CD to invest in a loan -- or several -- that Zopa has made. On a $10,000 CD, that's about 83 cents a month, which sounds like nothing. But with multiple lenders, it adds up. You can also choose to reduce the interest rate on your CD and donate that amount to a borrower of your choice, reducing his or her monthly payment.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Borrowers create profiles to describe their needs and can upload text, photos and video and link to their other social-networking pages. Lenders can read the profiles and also see what help the borrowers are already receiving. If enough people invest in a loan, a borrower can actually cover his or her entire monthly payment, and extra funds are considered prepayment.
There are no fees for borrowers or lenders, and because lenders aren't on the hook in any way, default isn't something you have to worry about.
Online Lending Sites
1. Riskier Return: Prosper.com
2. Safety First: Zopa.com
3. Lend to a Friend: VirginMoneyUS.com
4. What's New? P2P Loans for College
Back to: Risks and Rewards
-
Stock Market Today: The Dow Adds 15 Points To End Its Losing StreakEquity indexes opened higher but drifted lower as markets priced in new Fed forecasts.
-
What Is a Qualified Charitable Distribution (QCD)?Tax Breaks A QCD can lower your tax bill while meeting your charitable giving goals in retirement. Here’s how.
-
Roth IRA Contribution Limits for 2024 and 2025Roth IRAs Roth IRA contribution limits have gone up. Here's what you need to know.
-
Four Tips for Renting Out Your Home on Airbnbreal estate Here's what you should know before listing your home on Airbnb.
-
Five Ways to a Cheap Last-Minute VacationTravel It is possible to pull off a cheap last-minute vacation. Here are some tips to make it happen.
-
How to Figure Out How Much Life Insurance You Needinsurance Instead of relying on rules of thumb, you’re better off taking a systematic approach to figuring your life insurance needs.
-
Amazon Big Deal Days Is Coming! We’ve Got All the DetailsAmazon Prime To kick off the holiday season with a bang, Amazon Big Deal Days runs Tuesday, October 8 and Wednesday, October 9.
-
How to Shop for Life Insurance in 3 Easy Stepsinsurance Shopping for life insurance? You may be able to estimate how much you need online, but that's just the start of your search.
-
Five Ways to Shop for a Low Mortgage RateBecoming a Homeowner Mortgage rates are high this year, but you can still find an affordable loan with these tips.
-
Retirees, It's Not Too Late to Buy Life Insurancelife insurance Improvements in underwriting have made it easier to qualify for life insurance, which can be a useful estate-planning tool.
