We value transparency regarding your lending here at Zopa and that is why we are working to provide better visibility to see where your money is in the lending queue. We are working on improving this and updates will be introduced to My Zopa over the coming weeks.
In the meantime here are answers to some of the more commonly asked questions we get regarding the lending queue and how it works. We hope these provide some clarity on the current lending process.
What is the lending queue and how does it work?
The lending queue is the process by which lenders are matched to borrowers. There are two key principles to how we match lenders’ money to loans for our borrowers.
- We prioritise repayments over new money: this helps ensure that existing lenders continue to grow their money with the least disruption
- When matching money to loans we try to ensure all customers get a fair deal
There are two steps in the process;
First, money goes into a queue. There are actually two queues, one for new money, based on a first in, first out approach, and one for repayments. We prioritise the repayment queue ahead of the new money.
Second, there is a processing pool, where money moves from the front of the queue to be matched to borrowers in micro-loans, to help ensure all lenders’ funds are diversified in small chunks. We typically put about 2 days’ worth of lenders’ funds into the processing pool, and each day it is topped up with money from the front of the queue with repayments being prioritised.
Additional questions answered
How does Zopa decide which funds get matched once in the processing pool?
Once funds move from the queue to the processing pool they then get matched based on loans in the market and to deliver an average return to lenders, meaning that some funds will get matched to higher or lower credit grades based on lenders’ previous matches.
How is my max exposure decided?
Funds will get diversified so that you are lending no more than 2% of your funds to any borrower. When you first start to lend this means that your loan chunk size will be based on the initial amount that you offer. Loan chunk size will then be determined by the combination of your repayments and any new funds you have transferred and are queued to be lent, at the time they’re taken from the queue and put in the processing pool, rather than by the total funds you have lent at that time. That means that we would split your money across at least 50 borrowers (2%) at the time of matching or in £10 units, whichever is the larger. As your repayments grow in size your loan chunk size will also grow in line with the 2% maximum exposure level. This ensures your funds are well diversified while allowing Zopa to lend your money as quickly as possible.
What is the average time to get new funds and repayment money lent out?
Zopa is a market platform where lending and borrowing demand determine the time to lend. Low borrowing demand and high lending supply can lead to longer waiting times for lenders and vice versa, if borrowing demand is high but lending supply is low. We expect the changes and updates we have in the pipeline around improved visibility of where your money is in the queue, will provide clear information on times to lend.
Why does it take longer for new funds to get matched over repayments?
At Zopa we prioritise repayments to ensure that existing lenders’ money is relent quicker. This is partly to reward loyal and existing customers that auto-lend but also because repayments make up the majority of funds that are lent via the market. That way we can aim to lend the majority of repayments each day and then top-up the matching engine with new money once all repayments have been lent. We tend to get most repayments in the last and first weeks of the month, meaning that new funds can be lent quicker during the middle two weeks of the month as there is less repayment money being put on the market.
Why aren’t funds split into repayments and new funds in My Zopa?
We currently show the total queued to lend figure as one number combining repayments and new money. We are looking at introducing an easier and clearer way to display how your money is split into different tranches and will be looking to update My Zopa in the coming weeks with this new level of detail.
Is there anything I can do to improve my place in the queue?
No – Fiddling with your funds in the queue by removing funds and re-adding them will mean that you go to the back of the lending queue. To lend your funds as quickly as possible it is best to leave Auto Top Up on and let the matching process run as normal. Any tinkering could damage your position in the queue and make it longer for your money to be lent out.
What happens if I move funds off the queued to lend and then re-add them?
This will lose your position in the queue and your funds will go to the back of the lending queue, taking longer for your money to be lent.
Do I lose my position if I change lending term?
Existing repayments in the queue will keep their position however any new funds will go to the back of the lending queue relating to that term.