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Zopa rates – from borrower APRs to lender returns

In our previous post, Zopa rates: An introduction, we talked about the different kind of rates at Zopa, and what they each mean.

This time, we’ll be discussing the relationship between the APR on the borrowers’ side, to the returns you see as a lender, and give more insight into how the two sides of Zopa fit together.

The cost of borrowing

APR – annualised percentage rate – is the industry standard definition of the cost of borrowing money, including interest payments and transaction fees associated with getting the loan. It is expressed as a percentage as it reflects the actual yearly cost of borrowing over the lifetime of a loan. By law all loan providers must show borrowers an APR to help them to compare different providers who might offer different fee structures when taking a loan.

At Zopa, the APRs we show our borrowers are made up of an upfront fee, an on-going servicing fee and an interest rate paid to the lender. Some of the upfront fee and on-going servicing fee contribute towards Safeguard if a loan is allocated to Access or Classic.


The last fee Zopa takes is a small, ongoing loan servicing fee. This is important for a couple of reasons:

  • Every loan we approve at Zopa is a going concern for us. This fee aligns us with our lenders because the money we make is dependent on the loans performing as expected
  • If Zopa were to go out of business, a back-up service provider could come in and take over the servicing of outstanding loans, essentially being self-supporting, meaning you would continue to earn returns from these loans.

Lender returns

What this means for you is the headline rate that you see (3.5% for Access, 4.3% for Classic, 6.7% for Plus) is the interest rate the borrower pays, minus the fees Zopa takes and any contributions to Safeguard. As it’s blended across all loans, it should translate into the rates you expect to see. For more detail on the types of rate at Zopa, look back to Zopa rates: An introduction.

Remember: when you lend your money your capital is at risk and is not protected by FSCS. Our risk statement has all the details.