22 replies to this topic

[DMR]

Zopa: "Still wondering why? Because people are better than banks!"

...what people?  They have gone, only robots and alogrithms remain.

Before I start I should point out I have recently been declined a loan to consolidate some debts.  Firstly I had to wait 3 days (72hrs for a response), so perhaps there is a human there?  doubt it...

I now earn more than 90% of the readers of this board assuming it's representative of the UK (to put my frustration into perspective).  I have less than £15k unsecured debt (£10k is loans, rest is credit card) and a disposable i.e. what's left AFTER all my debts and expenses have been paid of £1300+/month, looking to consolidate a loan and card (i.e. not extend debt).  I already have a Zopa loan and have repaid over £20k to Zopa (9k on current loan paid(!)) never missing a single payment.

It's sad to see Zopa go the way of the banks by adopting the same loan criteria they do.  Great, so your default rate is down from 3% to less than 1% - it makes lenders less money as they receive less %'age APR (they can generate a marginal income over certain fixed savings accounts), and it's much worse for borrowers as you are turning away customers you would have previously serviced under your old model.  The changes you have crept in under the radar over the last 4 years benefit Zopa financially as your overheads are lower, but you lend to fewer people and your 'savers' make less money - ouch - only one winner - who were those backers looking to sell their stakes in Zopa again?

Zopa does not appear to include accurate representation of their own fee! (which varies) to the headline figure quoted in the 'Quick quote' which feeds the daily figures they compare against competitors - for example in my application it ended up being double double the fee in homepage quick quote which affects APR massively - it's both the rate and fee that change - but looks like the nice comparison table takes the 'best' fee not the one borrowers will actually end up paying on average.  In my experience banks rarely vary fees or APR when applying.   This is a misleading at best.

Whatever happened to listings(!) The only USP Zopa had for those with active credit history was Zopa listings, which is now gone.  When Zopa declined a previous loan application I went to the competitor and got the loan successfully.  they got the fee, the lenders got a higher APR and I was happy.

I think it's only a matter of time before more firms do exactly the same thing, as to be fair, a computer could do it all now the software is developed (outside of fielding calls about account details and chasing).

Zopa is now a Copy Paste business model..

[Paul_Herring]

DMR, on 12 July 2012 - 13:58, said:

It's sad to see Zopa go the way of the banks by adopting the same loan criteria they do.

Has Zopa really relaxed their lending criteria to that of banks? That's surprising....

[figures18]

Hi DMR

I lent on your 36 month Listing back in 2009, thanks for paying promptly and clearing the loan early.  In fact as you stated in your listing you did clear the loan within 12 months.  Looking back at that Listing I see that you had 4* for Creditworthiness and the same for Stability but none for Affordability.  Of course in the intervening period your situation will have changed.  For listings and for markets, affordability 'gradings' for want of a better word are assessed by Zopa on the assumption that the loan has to be affordable if other debts/loans continue to run and aren't paid off with the Zopa loan.  Are you saying that your recent declined application for a loan was to pay off what you had outstanding on your current market loan?  If that is the case, were Zopa aware of that?  There have been many occasions where Zopa deduct the relevant amount to clear the outstanding balance and disburse the £difference to the borrower who then repays the most current loan at whatever the agreed repayments are. If that wasn't clear to Zopa you may want to mention that fact to see if it makes any difference.

I'm not going to get into a discussion about whether or not Zopa are human or automated.  Listings ended some while back so now borrowers are only able to apply via the Markets option.

As for the difference in borrower fee and the change in APR, Zopa along with all loan providers show a representative APR as their headline rate, it's fully legal and in line with current rules.  As you know, and as it says on the main site, not all borrowers will fit the criteria for the headline rate and therefore the APR will be different due to the change in interest rate and the borrower fee.  There's nothing hidden as such, all borrowers see the rate that's applicable to them and the corresponding repayments before they decide to proceed.

[DMR]

Paul_Herring, on 12 July 2012 - 14:08, said:

Has Zopa really relaxed their lending criteria to that of banks? That's surprising....

Bully for Zopa, why borrow from a company less likely to lend to you than a bank?  and if your history is vaguely 'busy' give you a higher than quoted APR..  I agree the 'safety' net for lenders is much greater, but there is no great reward here - you are taxed on the income and reality is ISA or other high interest can give you the same.   It was the warm fuzzy feeling about borrowing from real people that made this attractive, but it's gone and turned into a mindless corporate.

maybe Zopas benefits are:

1. you can repay early, but you can also with a bank
2. you can repay smaller chunks  - This is good, but how many people actually do?  When I have repaid loans it's generally been the entire balance.  I have repaid banks at no additional charge.
3. can you borrow more and extended terms - Banks offer 7 years and up to £20k, I don't believe Zopa do.
4. other positive financial circumstances are taken into account - Zopa takes no other positive financials into account, a bank can offset risk against other accounts or other assets
5. the banks do not profit from you - ok, this is perhaps a benefit, but neither do people at Zopa as you won't let them lend to the people that get them better than average savings interest - tax and declining returns see to that

As it stands I will approach a competitor for the amount I was after.  By forcing out dynamic borrowers like myself (who have borrowed and repaid more money cummulatively across providers than say 7 of your 'safe branded' borrowers - I've also taken 3 loans with Zopa and happily would have had more), you are squeezing the margin or return for your clients, the savers, and thus defeating the point of your own business model - making lending attractive through market beating rates.  

There is simply not enough 'class AAA' borrowers to sustain your business long-term - In my opinion of course as a disgruntled borrower.

Edited by DMR, 12 July 2012 - 16:28.

[DMR]

figures18, on 12 July 2012 - 15:50, said:

Hi DMR

I lent on your 36 month Listing back in 2009, thanks for paying promptly and clearing the loan early.  In fact as you stated in your listing you did clear the loan within 12 months.  Looking back at that Listing I see that you had 4* for Creditworthiness and the same for Stability but none for Affordability.  Of course in the intervening period your situation will have changed.  

figures18 - Thanks for your support previously.  I guess my grumbles are exactly that - there is no justification I can give bar ticking the 'debt consolidation' option, no way to explain why the finances are needed or what they will be used to do.

The money could enable me to reduce (including the new payment) outgoings by £150 - £400 dependent how I applied it (loan debt vs. cards).  Just getting bored with Zopa and it's ways given since I was first a borrower, my overall debt has reduced substantially and now I can actually afford more, they stop lending to me(!).

As for contacting them, my point is accurate there are no longer humans, there is no recourse for borrowers you are faced with an automated message from a nice young lady reading a script.  Perhaps for existing borrowers if they allowed an option to select 'Use proceeds to clear my existing Zopa loan' and that gave you some credibility - and also automatically cleared your outstanding zopa debt?  Anyway keep your eyes peeled at the competitor (It's not fair to mention name, but they are the only P2P lender who still has listings) for my alias for circa £10k.  I have already used them to borrow and since clear £2k last year.

[figures18]

DMR, on 12 July 2012 - 17:11, said:

As for contacting them, my point is accurate there are no longer humans, there is no recourse for borrowers you are faced with an automated message from a nice young lady reading a script.

Thanks for making this point DMR.  Again and again and again, complaints by (me), lenders and borrowers regarding telephone access.  Please Zopa will you sort out your communications.  Answerphone/queueing system, anything would be an improvement on automatic hang up and slow contact us e mail turnaround.

Edited by figures18, 12 July 2012 - 17:34.

[sl75]

DMR, on 12 July 2012 - 17:11, said:

Anyway keep your eyes peeled at the competitor (It's not fair to mention name, but they are the only P2P lender who still has listings) for my alias for circa £10k. I have already used them to borrow and since clear £2k last year.

Considering the typical risk level associated with that competitor's customers, simply having their name appear on your credit report could have a negative impact on credit scoring! (NB not an entirely serious comment...)

[DMR]

sl75, on 12 July 2012 - 18:35, said:

Considering the typical risk level associated with that competitor's customers, simply having their name appear on your credit report could have a negative impact on credit scoring! (NB not an entirely serious comment...)

The risk level is offset against higher rate of return.  I would assume I am their ideal borrower - an extensive credit history means difficulty obtaining loan elsewhere (just with various loans etc..) with a stable job, 8yrs plus house, good wage.

My experience of their checks was that they were miles ahead of anything I underwent for a similar amount from Zopa listings.  Clearly outsourced, but rigourous nonetheless.

Zopa: Borrowed £2k
1. Extensively check what is written, make sure there are no obvious untruths, contact borrower either cancel or amend listing
2. Credit check - yes
3. Documentation required: None(!)


Competitor site: Borrowed £2k
1. Allow lenders to take listing at face value, don't care too much about what is written.  This is followed up in the checks - see below.
2. Credit check - yes
3. Documentation required:

Quote

•      You have mentioned your net monthly income as XXXX, Child support income XXX & other income as XXXX. Please furnish 3 most recent copies of yourmonthly pay slips & the valid proofs of Child support income & otherincome,.
•       Kindlystate the Name of your Employer, Designation & for how many months/yearsyou have been working for them.
         Kindly give a briefregarding your stock portfolio.
•      Copy of 3 months of latest bank statements. (Please ensure this is a formalbank statement and covers THREE whole months i.e. from 1st March2011 – Till date).
•      Are you Married or have any dependents?
•      Whom do you live along with. How many members share your apartment.
•       Are you getting any social securitybenefits/ Government Pension or any tax and child care benefits?
•      Debt Repayments, if any. Please state the limits & remaining balances onthem.
•      Do you have any Pay Day Loans? If any, please list them along with theremaining balance on each of them.
•       How many defaults you had in thelast 24 months? Please furnish the information about the same & the reason for default.
•       Overdrafts & Credits, if any. If any, then please list the limits & the remaining balance on each of them.
•      How long have you lived in the UK for?
•       How many houses have you lived inthe last five years? Kindly list down the addresses for all of them. Also,please explain why you have left each one of them.

Says it all really - the listings may look dodgy, but the proceedures and checks are superior to anything Zopa ever initiated.

Edited by DMR, 12 July 2012 - 22:06.

[Deddington]

DMR, on 12 July 2012 - 22:03, said:

Says it all really - the listings may look dodgy, but the proceedures and checks are superior to anything Zopa ever initiated.

So for a measly £2k loan they have to employ people to work their way through a mountain of paper work, of which some is still taken on trust, to authorise the loan.

Now that is hardly going to make them money or at worst they will skip the checks.

Why don't you post to their forum how wonderful they are are rather than vent your displeasure at being rejected by Zopa here?

Hell has no fury like a borrower scorned.

[DMR]

Deddington, on 12 July 2012 - 22:34, said:

So for a measly £2k loan they have to employ people to work their way through a mountain of paper work, of which some is still taken on trust, to authorise the loan.

Now that is hardly going to make them money or at worst they will skip the checks.

Why don't you post to their forum how wonderful they are are rather than vent your displeasure at being rejected by Zopa here?

Hell has no fury like a borrower scorned.

The effort in the checks was on me, I had to send everything electronically - the effort they had was to identify suitability by looking at some documentation - that would take say 30 minutes?  The checking as I stated was outsourced, my point was that Zopa never checked anything about my income, only my debt.  That's all they do now - the banks and competitors will ask for proof of income - unless I'm wrong?

Why I don't and go and post there? I likely will. However, I am also currently a borrower at Zopa 10 months of a 3 year loan outstanding, have repaid circa £25k to Zopa across 4 loans in 4 years and have lent in the past too - Zopa and lenders have both made money from my activity here.    Try reading the blog purpose on Zopa's site before deciding to comment with words of wisdom.  I suggest I know more about borrowing from an actual borrowers perspective than you do:

Quote

A place for members to meet up and chew the fat about all things Zopa, be it lending tactics, where they see Zopa going in the future, or even what they don't like about the site.

Edited by DMR, 13 July 2012 - 07:21.

[DMR]

figures18, on 12 July 2012 - 17:34, said:

Thanks for making this point DMR.  Again and again and again, complaints by (me), lenders and borrowers regarding telephone access.  Please Zopa will you sort out your communications.  Answerphone/queueing system, anything would be an improvement on automatic hang up and slow contact us e mail turnaround.

The company I work for uses a request tracking system to handle circa 200,000/250,000 queries a year.  8/9 staff deal with those volumes

All are:
- Time stamped
- 98% Responded to within SLA's of 1hr&24hr
- Fully auditable
- Have auto-responders
- Reporting
- Different team 'pots'
- Can be updated in bulk with communications

Zopa should give it a try, it's free(!)  
http://bestpractical...creenshots.html

Edited by DMR, 13 July 2012 - 08:10.

[giles]

I'm not going to go into the details of a specific case on a public forum but I would like to say that this application was declined by a human underwriter and not a computer system. If you would like to contact us we will provide you with some detail.

[Toffeeboy]

As Deddington has mentioned, "hell hath no fury like a borrower scorned" so you get rejected for a loan request probably becuase you already have a large amount of credit outstanding from the sounds of it but as Giles has kindly offered to discuss the matter then I would take him up on the offer. Certain other sites would have deleted this whiole post or at least edited if it had appeared on their forum.

I am very happy with the credit checks that Zopa do as a lender and there seems to be a steady stream of borrowers getting loans without the default rates going up so it seems that the underwriters are doing a good job. Maybe you would have been a good borrower but to protect our money Zopa are always going to have to reject a lot of potential good borrowers, don't blame the system blame the people that play the system and don't pay the money back.

Zopa can vary the fee as much as they want, they do this to meet the requirements of putting a percentage on a price comparison site as a certain percentage of people have to be offered a loan at that rate to advertise that rate. The varying fee is therefore used to make sure that Zopa don't break the law AIUI.

If the savers are making less money then who is the winner? Zopa makes their money from charging a fee to borrowers when they apply for a loan, the majority of which covers credit checks and arrangement fees, and a percentage to the lender overthe course of the loan. This means that if no loans are being arranged then Zopa isn't making any money, just like if a loan goes bad Zopa stops making money just like the lender does so it doesn't benefit anyone except the borrower who doesn't repay his loan.

[DMR]

giles, on 13 July 2012 - 08:54, said:

I'm not going to go into the details of a specific case on a public forum but I would like to say that this application was declined by a human underwriter and not a computer system. If you would like to contact us we will provide you with some detail.

Giles - I appreciate the response and the candor.  I do not need to know why I was rejected (though appreciate the offer), I have access to my own credit history and am obviously aware of everything I have borrowed and from whom.  

Criteria is not my gripe, Zopa can choose their criteria and apply it, it's simply that Zopa no longer want to know the circumstances that may mitigate a request or the history (the demise of listings and barring those with active credit history).  Though an underwiter applied your criteria, I'm sure (with respect to their intelligence), their job is to review information that a computer cannot be coded to interpret and apply Zopas rule of law.

This is the way Zopa have chosen to go and I have to accept that and move on, I'm just disappointed.  Surely someone who has borrowed and repaid £100k+, never missed a payment, borrowed from you before and repaid early counts for something - it does not.

Though I appreciate being informed an underwriter made the final 'review and reject', I'm sure if you could have applied those checks technically you would have done so.  After all an underwriter is an overhead you would want to do without now you longer do listings.

To finish my venting I thought I'd try and summarise what I believe Zopa could do better:
1. Allow borrowers to use their new loan request to repay an existing Zopa loan - allowing this to count positively in your review (i.e. instead of treating my request as a loan for £8k, you would have only reviewed the risk of a £2k extension) and my payments to Zopa would have been £200/month cheaper than they are now.  
2. Use a request tracking system to keep borrowers updated on loan review progress.  Busy, yes, but failing to meet the 24hr statement does cause borrowers issues - it's not like the timing of the loan is of no importance - delays cost money and cause stress on borrowers or raise false expectation.  I get the impression there is one phoneline in, and when it's busy you simply get blocked from calling(!)
3. Allow lenders to choose 'risk' add-ons (criteria that underwriters rule people out on) e.g. Accept risk of existing unsecured borrowing 10K/£15k/£20k, accept risk of has used loan provider X,Y,Z that could allow lenders to get a higher rate of return and underwriters find lenders willing to accept that profile.
4. Partner with someone like Noddle, who give free credit history access - allow lenders to have it as a free service.  Tell declined borrowers they can review their on history on there - here is the link etc...
5. Give existing borrowers some credibility(!).  I have repaid £20k in loans to Zopa - this seemingly counts for nothing.
6. Provide alternatives - underwriters may not be willing to lend the amount - why not let the borrower set a range.  I nearly always apply for what I would LIKE, not what I NEED.  Allow discretion e.g. we won't lend you X, but we offer you Y - do you accept Y/N.
7.  I'm not trying to create a false impression here and I may well be wrong, but everytime I have asked for a Zopa loan and its rejected I get circa 2/3 Texts and at least one call from a loan/PPI company/payday.  I may be wrong but the timing is surreal..nothing for weeks and then while I'm 'under review' I get several - I pick up the call expecting someone from Zopa and I get some PPI muppet who knows my name(!).  I have received a written reply before saying none of my details are shared, I would hope this is still the case.
8. Continue the discussion board.  I appreciate what I have been talking about does not necessarily give Zopa the comments it was looking for, but I would hope are of interest to you and borrowers lenders alike  - however, get Single sign-on working - having to register again to use the board is a detractor.

Thanks

[elljay]

DMR, on 13 July 2012 - 11:15, said:

To finish my venting I thought I'd try and summarise what I believe Zopa could do better:

A couple of good points in there and constructive criticism is helpful, but on this one:

Quote

8. Continue the discussion board.  I appreciate what I have been talking about does not necessarily give Zopa the comments it was looking for, but I would hope are of interest to you and borrowers lenders alike  - however, get Single sign-on working - having to register again to use the board is a detractor.

Some people actively want to have different IDs on the forum to the main Zopa site so they can post without it being linked to their lending/borrowing.  With the "Remember me" option available I don't think the few minutes needed to sign up again here is a particularly huge burden.

Good luck with finding a loan!

[Ledney]

It seems like you're a good responsible borrower, but us Lenders have to except that Zopa do the judgement. Maybe some of your circumstances have changed? I don't know, and leave it up to Zopa. I'm sure many good potential borrowers get rejected, but I also have quite a few bad debts, a very large proportion of them on Listings, the demise of which I do not regret.

[donallgarvin]

I know how DMR feels.

I am in the top 10% of earners I reckon.
My outgoings are moderately low and I have substantial savings.

For a test, I tried borrowing from ZOPA when I had around £15k in ZOPA - my outgoings as a % of my income were:
1) Mortgage 7%
2) Household Bills 3%
3) Other spending 40%

I was refused a ZOPA loan - no reason given.

Tried again a few weeks back - got refused again.  Ok - now I only have about £11k in Zopa - maybe that was it.

Ultimately, I find it ridiculous that you could lend money on ZOPA but not be allowed to borrow.

[Toffeeboy]

donallgarvin, on 20 July 2012 - 14:33, said:

I know how DMR feels.

I am in the top 10% of earners I reckon.
My outgoings are moderately low and I have substantial savings.

For a test, I tried borrowing from ZOPA when I had around £15k in ZOPA - my outgoings as a % of my income were:
1) Mortgage 7%
2) Household Bills 3%
3) Other spending 40%

I was refused a ZOPA loan - no reason given.

Tried again a few weeks back - got refused again.  Ok - now I only have about £11k in Zopa - maybe that was it.

Ultimately, I find it ridiculous that you could lend money on ZOPA but not be allowed to borrow.

Why is it ridiculous? Zopa have previosuly stated that a high percentage of their lenders wouldn't get a loan through them and I for one like this fact. You can't use money being repaid to a lender to cover a loan because you aren't guaranteed to receive it. I would rather not get my money leant out than lose it through someone defaulting.

If you are happy to lose your money then lend on Encash with their bad debt rate of over 15%, I would rather a few good borrowers fail to get a loan through Zopa than a few bad ones get a loan and default.

[ladyliberty]

I've no idea whether I could get a loan from Zopa even though I'm a lender because I've never tried. Why would I? If I have money to lend I am clearly living within my means and additionally I can take a relaxed view of the fact that I could theoretically lose every penny I invest in Zopa. If I applied for a loan this would tend to suggest that I was in trouble and shouldn't be relied upon to repay because the logical step to reduce the sum I needed to borrow would be to sell as many of my loans as I could.

[Uncle Tone]

ladyliberty, on 20 July 2012 - 18:22, said:

... I can take a relaxed view of the fact that I could theoretically lose every penny I invest in Zopa.

Relaxed view?  Come on now, I am guessing you'd be just a bit miffed....  If I lost every penny I've invested in zopa, I would be a little miffed. We wouldn't starve, but we might have to re-wallpaper and replace some of the furniture.  

They would never lend me anything. I'm pretty sure there is no record of my ability to repay a loan, because I haven't had one for the last forty years or so. And I have no regular income except for a pension or two, so who knows how I would handle debt?