Bus driver Marcus Baldaro has recently made his first Zopa loans as he starts the long journey towards saving up for a deposit on a first home.
The 21-year-old from south Dorset has put aside around £150 since signing up in February. “But I’ve earned easily more than double the interest than if I had left money sitting in my bank,” he says.
“I have just about managed to clear my debts so I wanted to think about saving or investing – and I was keen to find something that would give me a better return than the banks.”
While some of Marcus’s family and friends have money in the stock markets, he decided this wasn’t for him. “I’m a complete layman when it comes to investing,” he says. “If I had money in shares I’d be checking the prices all the time and biting my nails.”
The concept of peer-to-peer lending was new to him, but the more research Marcus carried out, the more confident he felt that Zopa was the right option.
“A big part of my decisions was the fact that the returns were so much higher than elsewhere,” he says. “And I chose Zopa because it was one of the earliest incarnations of P2P lending – it had lasted through the recession.
“When I spoke to my bank, the only chance I had of getting a semi-decent return was to lock my money up for a long time, or to deposit a big lump sum – which I just don’t have.”
Marcus also investigated the potential risks that P2P might carry. “I went on a lot of third-party websites such as MoneySavingExpert to see what experiences other people had had.
“There were some who said they had suffered defaults on some loans, but everything that had been lost had been made up through interest on other loans. I got the impression that, ok you might have a default or two but this would be evened up by returns elsewhere.
“On one forum there was someone who had £85,000 in loans – I could live off the interest on that. But I thought, if that person is confident enough in the site to put that sort of money in, then I’m sure I can do the same.”
The fact that he is lending directly to other borrowers also appeals. “I think that if I was borrowing money from other real people through something like Zopa, I might have a bit more interest in making sure I repaid my loan on time.”