Zopa launched the Safeguard at the end of April and since then almost 20,000 savers have chosen to lend through it, funding more money than ever before. As a result Zopa is focusing on telling more borrowers about the great rates offered by Zopa savers to help you lend more quickly.
Safeguard lending is now funding all new loans approved by Zopa’s loan team, meaning there is almost no money lent through non-Safeguard offers.
We have contacted all of our savers who still have a non-Safeguard lending offer advising of the lack of activity on those lending offers.
As the non-Safeguard offers are no longer providing our savers with a good lending experience those offers will be removed over the coming weeks. We will notify all savers by email, giving notice of this change, and offering them the opportunity to lend through Safeguard.
Before we remove non-Safeguard lending offers we are launching some necessary upgrades to Rapid Return.
What is Rapid Return?
If you need urgent access to money you’ve lent out before your borrowers are due to pay it back, you can use the Rapid Return tool. Rapid Return works by transferring your loans to other savers so you get back the money you lent that is still owed on those loans. Zopa charges a 1.00% admin fee for all successful transfers made via Rapid Return, which is deducted from the transferred capital. You can use Rapid Return for some or all of your loans.
How is it changing?
Over the coming days all Rapid Return loans will be transferred to savers who are lending through Safeguard.
How will this work?
If you wish to access funds through Rapid Return you will simply state the amount of money you require rather than choosing a market from which to transfer loans. With Safeguard lending it’s important to lend to a mixture or ‘basket’ of different loan markets to earn a good return. So it is fairer for both the saver transferring and the saver receiving loans for a range of markets to be selected. The Zopa system will first check the eligibility of loans for transfer – a list of eligibility exceptions can be found on the Rapid Return page.
Zopa aims to transfer the fewest loans possible to meet your requested sum, so you are still left with a good mixture. We will do this by selecting newer loans first, as these will have more capital outstanding.
Loans created through Safeguard lending will be transferred to other savers lending through Safeguard. The loan will continue to be covered by the Safeguard fund.
Loans in the A*, A and B markets only that were created through a non-Safeguard offer will be transferred to savers lending through Safeguard. The recipient will be protected by the Safeguard fund for the outstanding balance of the loan transferred. Zopa will make the required contribution to the Safeguard. The saver who receives the loan benefits from the rate at which that loan was originally created. This means that savers can no longer pick up loans transferred by Rapid Return in A*, A and B markets through non-Safeguard lending offers.
The C and Y markets are no longer open for new loans but savers are able to transfer their existing C and Y loans through Rapid Return. Over the coming weeks Zopa will contact people who have been active recently in the Rapid Return C and Y markets and give them the opportunity to continue their C and Y Rapid Return activity. The recipients of C and Y loans transferred through Rapid Return will not be covered by the Safeguard fund for those loans. Anyone who wishes to lend in C and Y and who has not recently been active in these markets can also email firstname.lastname@example.org to request access to this service.
To pick up C and Y loans savers must have available funds on their Safeguard offer and will receive a loan if they are next in the queue when a loan becomes available. Savers can pause their C and Y lending at any time from their dashboard. You can find out more about C and Y lending here.
Coming Soon – better Rapid Returns
There may be cases where we cannot transfer on one of your loans as it earns a lower rate of interest than what a similar loan would achieve if it were made today. This means that if interest rates rise or tracker rates move over time, some loans become ineligible for transfer.
To make sure that savers can always access the money they need from what they have lent Zopa is improving Rapid Returns over the coming weeks.
You will be able to sell a loan even if the interest rate was lower than the tracker rates available on that day.
So that another Zopa saver can take the loan from you, an extra amount needs to be credited to them. This amount represents the extra interest they would expect to earn if they lent out the same amount of money in a similar loan, but at the current rate.
In order to minimize the effect of these credits when you use Rapid Return, we will prioritise loans that meet – or are higher than – the going tracker rates, and then order by youngest loans first. If the target amount cannot be reached just using these loans, we will then start to transfer loans at a lower rate, starting with the smallest differences in rate.
Before you decide to transfer your loans Zopa will provide you with a quote, showing you how much we expect to return to you, how much you might have to credit other savers where the interest rate is lower than the current tracker rate, and the 1% administration fee.