Peer to Peer Lending Companies

[V41LEY]

I'm looking for better returns on some money have. I've heard about firms like Zopa, Ratesetter etc. You lend money to get returns of around 4%. Minimum loan is £10 and is tied up for 3-5 years. Looked pretty safe against default as the companies operate schemes to protect against bad debt defaulters. They will be covered by FSA protection scheme next spring so investments up to £85k fully covered. It seems most people plough their returns back into the scheme so it just rolls along getting bigger.

Am I being caught up in the hype or has anyone any experience in this form of investment ? Cheers.

[evenflow]

I've thought similar recently and about 6 months ago put £100 into Zopa to test the water.

You can choose your level of risk - based on customer credit score - and the returns are proportional to that. Low risk, low returns; higher risk, higher returns.

So far all my £100 has been loaned out and nobody has defaulted so far. I've made about £2

[V41LEY]

Good idea. I might take a punt with a grand and see how that does until fully protected.

[Dave 500]

I have accounts with Zopa and Funding Circle,

55 loans with Zopa no defaults.

97 loans with Funding Circle with 2 defaults.

I have set them up so they automatically select the safest return but the lowest rate, also they both just reinvest interest back in.

So far I'm looking at a return of around 5%

[ReallyReallyGood]

I've had £1k in Zopa for about 8 months and no defaults (> 100 lenders). I think it's a good service, great way of cutting out banks, diversifying your savings, and helping others out.

The only PITA is that you have to declare it to the tax man as of course it is payed to you without income tax being applied. If you already do self-assessment then great, but if not then it's an issue to consider.

[Simpo Two]

I heard today that the Govt is going to increase the regulation of these companies - which no doubt will reduce returns.

[BoRED S2upid]

Can you set up a regular investment? say £50 per month by DD and forget about it once its set up or does it need some regular management? I could risk £50 per month for a 5% return in a few years.