Zopa - It’s Called Social Finance
Zopa, funny name but great idea. The idea is this: Bring together a community of people who help each other financially using the tools of finance and social networking together. Confused? Don’t worry, I was too. I’ll break it down further for you, but first I’ll tell you a bit about Zopa, the global social finance company.
Zopa is a US company chartered in Delaware that also has operations in the UK and Italy. It first launched in the UK in 2005 where it now has over 87,000 users on its peer-to-peer lending website. It launched in the United States in 2006.
We’re coining a term to describe what we do. It’s called social finance. It means we want to improve the tools of financial services, investments, loans and so forth, by allowing people to use them to help themselves, and other people, at the same time.
Now, how it works… Zopa’s site is like an online marketplace that matches private lenders and borrowers. Lenders choose the amount of money and interest rate at which they’re willing to loan their money and borrowers visit the site to check what rates are available. If the rates are to their liking, they can complete their loan with a few clicks of the mouse. Get it now? Learn the details of this operation at Zopa’s FAQ section on their website.
And don’t worry about security, they have that covered too. Members who lend money by buying a Zopa CD have their funds guaranteed by the issuing credit union and insured for at least $100,000 per member by the National Credit Union Administration.
Zopa is a genuinely great idea backed up by even better implementation. A community of members who help each other financially using the tools of finance and social networking. That’s the Zopa version of social finance.
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The only issue with Zopa and Prosper.com and their social finance ideas is that it is really not very germane to student loans. Often the interest rates (which are the painful cumulative aspect of student debt) are much higher on these sites than they are through student loan companies assuming that you didn’t get hosed with a prime+ rate of any kind.
Those sites are great for helping some people pay off emergency debt (leaky roof) or to help them dig out of high interest credit card debt, but student debt is the cheapest you can get interest rate-wise.
I left college with 48K in debt and decided i would be out by 30, and with some skill, and alot of effort I probably will be. Make your loan companies work for you, if they have lousy benefits, try to get your loans sold to a large company like nextstudent.com, once your loan originator sees you trying to leave they might offer you the same benefits plus additional, happened to me.
Best of luck
@Emily:
Boy, do we ever hear you. It’s hard enough to make payments on a loan when you DO have a job–much less when your sole employment is washing dishes 8 hours a week at the cafeteria in the student Union.
At Zopa, we are very thoughtful about how tough it is for students afford all the debt they’re having to take on, since many of us come from the student loan industry.
Congratulations on getting control over your own student debt!
What would you say was the worst part about your student debt?
I found a new company that plans on doing p2p lending specifically for the student loan market.
http://prosperlending.blogspot.com/2008/01/fynanz-to-tackle-peer-to-peer-student.html
Thats an awesome post really.