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Jun
Social lending is a great way to get the money that you need at a fair interest rate from a non-traditional source. It is also a great way for individuals with some extra cash to make a small amount of income by financing others and earning interest. This type of peer-to-peer lending has been successful in the UK over the past several years with the best example being the lending program called Zopa. Now there’s a new kid on the block, YES-Secure, that’s offering folks in the UK another option for social lending. Which one should you choose?
What is P2P Lending?
Also known as social lending, peer-to-peer lending is a system through individuals loan money to and borrow money from one another. The transaction takes place through a middle man (a social lending club) to ensure anonymity, allow for reviews of borrowers credit, facilitate payments, etc. The benefit to borrowers is that they may qualify for leans that they can’t currently get from their own banks and that they may get a better interest rate with social lending than with traditional loans. And, of course, this provides lenders with a way to earn interest on their savings while helping someone else out with a loan.
Overview of Zopa
Zopa was established in 2005 as the first peer-to-peer lending club so it has a long history and has been used as a model for newer P2P lending clubs. The company has spread out to additional countries including the U.S. and Japan but remains a top choice in the UK.
Zopa offers two different lender-borrower systems:
- Markets. The borrower’s credit is reviewed by Zopa and then the borrower is given a ranking. A loan is then made available based on the individual’s credit rating. The loan is funded by many lenders which reduces the individual lender’s risk of non-repayment. The loan is either a 3-year or a 5-year loan.
- Listings. In this section of the social lending site, potential borrowers can provide an explanation of why they need the amount of money that they are requesting. In this case, lenders bid for the right to lend the money at an interest rate of their choosing and the lowest interest rate bid is the winner. This allows lenders to take more risks with their loans but also to have the potential of earning more interest. It also gives borrowers without great credit a way to get funding at a competitive interest rate.
Overview of YES-Secure
YES-Secure is a newly-launched social lending site that is gaining a lot of attention in the UK right now. It is set up like a social networking site (similar to Linked In) where you connect with the people that you already know on the site. This provides a way for friends and associates to borrow and lend money between one another. Since it is facilitated by the site, rather than through just the two individuals, the loan is more secure and the threats that can happen to relationships when money is involved are reduced.
The process of getting a loan is similar to that of the listings section of the Zopa site. The potential borrower advertises why they need the loan and then the potential lenders bid on the loan in order to fund it. Borrowers can get their money for a variety of terms ranging from 1-5 years. As with the Zopa site, credit-worthiness is considered when you become a borrower on YES-Secure.
Some Questions to Help You Decide which P2P Site to Use
- Do you want to make sure that you work with a well-established site? If so then you’re going to need to go with Zopa since it’s been around for a long time and has good standing as a business in this industry.
- Are you interested in being on the cutting-edge of how p2p lending will work in the future? The social networking aspect of YES-Secure is fresh and new. It incorporates member blogs and other Facebook-like features. If this interests you then you might want to take a chance on YES-Secure.
- How much money do you need to borrow? Zopa has a lending limit of £15,000. YES-Secure allows loans up to £25,000.
- How old are you? YES-Secure will make loans to credit-worthy individuals aged 18 and up. Zopa offers standard loans to borrowers aged 25 and up and special loans to borrowers aged 20-25.
- Do your friends and associates have money to lend? If not then you may find that the social networking nature of YES-Secure isn’t going to benefit you in finding a loan and therefore the broader network of lenders at Zopa might be a good choice.
- Would you like to know the person you’re borrowing from or lending to? Some people already know a friend that they want to lend money to but they are hesitant to do so in an informal way. If this is the case, you could set up the transaction through YES-Secure.
- How good is your credit? Both sites require that you be credit-worthy as a borrower. However, you may find that the different options of both markets and listings provide you with better interest rates depending on what type of credit you have.
Pros and Cons of P2P Lending
Before choosing either of these sites, take a moment to consider the pros and cons of P2P lending as compared to more traditional loans. The ability to qualify for a loan with a better interest rate, clearly explain why you need the loan to increase your chances of getting it and to get a loan with low fees are all benefits for lenders. On the other hand, loans from these untraditional sources may be riskier than those from more established banks.
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Me again..lol…sorry my email address was incorrect please reply to this one instead if you can help.
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Hi im looking for a private lender , I need to borrow £3500 , mostly to clear debts and to pay rent arrears. Im a single mum to two young children but also work full time. id be prepared to pay back pretty high interest rates and would be able to afford to do so as the loan money would have taken care of my outstanding debts. I cant get a loan elsewhere i.e banks or loan companys as I dont match their criteria. Unfortunatly my credit rating is pretty rubbish as my ex partner took out loans and debts against my name. If someone can help me ..genuinely help me without scamming me Id really appreciate it .
Thanks Amy
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Thanks for the advice Nigel. I had a look at the sites you mention but didn’t find them (or the rates) that attractive.
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If I was you I go to Zopa and post a listing. This gives people a good chance to read about your personal issues and gives them a chance to assess your credit worthyness for themselves. I have only been using Zopa for about 6 weeks but my experience is that there is a far greater supply of potential funds than there is demand from borrowers so you should be able to get a good interest rate, particularly if you are planning to pay it off in say 24 months.
Good luck with the new jobs and the Zopa listing!!
26
ok guys, ive been reading comments from both sides, dont know who to go to for help, i have very bad credit rating at mo, due to being out of work for a while found it hard to pay everything. need a 2,700 loan within next fortnight,due to my hubby and i both workin in permanent jobs now, couldpay debt off within a year, can any one out there help me?I ve had tons of loan companies promising to help , but then try to charge you just for enquiring, getting desperate, have 3 kids ,dont want to lose house , any one willing to help?or advise me on wo to go to for help.
25
Hi
There’s also Quakle.com, focused on communities.
And RateSetter which offers poor returns to lenders
24
I have just started using Zopa (as a lender) and have so far found the website very good, particularly the bad debt data which really is key to deciding on rate setting. My concern with YS is the depth of market and indeed the rates being offered to borrowers – if you really are an A category borrower then why would you you pay significantly more to borrow on YS than Zopa? Are there any other P2P websites that anyone knows of??
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WARNING if you check YES-secure’s forums it seems that they do a full credit check when someone starts the process of borrowing. Even if you do not get a loan it will effect your credit score and so make it harder to get a loan elsewhere.
22
i am back on YS after longtime to add some more funds .. simply because-
1, Yes-secure now looks more promising for lenders looking for good returns (avg 23%)not much biding war as marketplace needs time to stable on interest offered
2, Speculations about underwriting process is now clear, YS do underwrite every borrowers
3, I am now very sure about reliability of YS in long run(10 + loans are in funded status)
now it’s time to grab opportunity of being fee free lenders
21
Yes Secure Review: update.
Well tonight they have had yet another unplanned website outage, seems to be an issue with the SSL side of things again.
“The web page at yes-secure.com/memberLogin.jsp might be temporarily down or it may have moved permanently to a new web address.”
Still no update on any bad debt insurance plan and still no new big player private lenders. So a lot of loans are still struggling to get funded.
It’s interesting to note that an A rated borrower at Yes Secure was fully funded at 13.95% over 36 months, not bad but goes to show the difference in credit ratings between P2P businesses as i’m sure over at Zopa the rate would have been about 7.9% for Zopa’s A36 rated borrowers.
So is a Yes Secure A36 a ZopaB36?
Still a question mark lingers over initial APR figures quoted during those turbulant start up weeks.
With The Funding Circle (www.fundingcircle.com) now open for business there is another place for people seeking to add another P2P business to their investing portfolio.
If The Funding Circle are paying attention they should be able to move into 2nd place behind Zopa very quickly, with Yes Secure still struggling to find their niche and feet in the expanding market.
20
I agree that this competition can only be termed good for either of the companies and even better for their customers… however, I am not so sure about regulation…i only hope it doesn’t curb the innovation which makes this enterprise so interesting!I think the fact that they can only succeed if people are satisfied with their services is a automatic regulation for these P2P platforms.
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If Zopa needed any incentive at all to finally get its act together, then a bit of healthy competition was it.
It will be interesting indeed to see how it all pans out.
Oh yes, and in my view ALL P2P lending should be regulated just like any other financial institution and there should be better clarity on risk to capital when marketing either service. Headline rates alone just isn’t good enough!
18
this private little debate is becoming interesting! I’ve never come across such grudging praise
half step forward and three and a half step backwards 
BTW, there is nothing called perfect business plan, certainly not when it leans on real, live people to succeed. i have been reading the YS discussion forum for quite some time. I think ultimately it will become what people will make of it…and that includes all the people who are exchanging views there as well as those who use it. its significant that 90% of the discussion(whatever it consists of, requests,expectations, demands)is carried on by the lenders, for the lenders and of the lenders; borrowers are deeply missing as expected. i think they should also come up with their side of the story. the sum total is if we want YS to be a social lending website dispensing loans at 35%, then that is what it will become i guess…
17
I’m pleased to say things are slowly changing at Yes Secure. The forum has become more of a 2 way process, with issues still being found but now there are promises to fix them. It seems someone at YS has accepted they had not created the perfect business plan or robust lending platform.
I still think lenders will be slow to invest, there needs to be a clear advantage or unique selling point when compared to the clear industry leader, Zopa. I can though, see the get rich quick lenders moving in now, have noticed a lot of cash on offer at 35% today.
Yes Secure may have to accept they might become a high risk investment website. High returns but also high risks.
Not the social side of lending at all, but there are lenders now who are going to potentially make a nice profit at the borrowers expense for a while, until the markets settle into a supply and demand pattern, or the default rates become alarmingly high and lenders are scared off.
So not a good start but at least someone is now listening over at Yes Secure towers
This review is as always a personal opinion and not financial or paid advice.
16
I agree Abby, peer 2 peer lending is indeed a new and refreshing idea but people should be free to make their own choices and not just be made to believe the company hype.
Likewise as long as comments are factual and not offensive people should also be allowed to point out potential pitfalls to lenders looking to invest in any business, new or established.
I feel I am qualified to comment on Yes Secure as I have invested money on their system and suffered from the many initial software issues. Some of the bad feeling towards YS was caused by the reluctance of the CEO and team to actually listen to lenders and address the issues, such as bad debt figures, Auto Lending errors, confusing emails, loans difficult to accept, delays in funds being withdrawn and so on.
Zopa indeed does suffer from issues, but the big difference is that lenders and borrowers are encouraged to participate on the forum to help make a better system for all. At no point would Zopa members be threatened with legal action for simply pointing out Yes Secure errors, such as using the dollar sign and not the GBP sign.
Yes Secure has sadly chosen to delete and modify members forum comments at will, so we are effectively censored by the Yes Secure team, despite trying to offer advice and ask questions.
You do have to admit the pre-launch testing of the software did leave a lot to be desired. It should not have been the job of the lenders to point out that some displays were in dollars on a UK only website.
If the CEO chooses to censor our comments on the official Yes Secure forum then providing we are making legal and factual comments we will post them elsewhere. It is still a free world and despite the threats of a few, it will remain so in my corner of the UK.
I invite people to post their comments about Zopa here too, of course I do, but I doubt you’ll find many references to legal action against forum members for providing honest criticism.
So there is a risk of negativity towards Yes Secure, perhaps they should look to how they are going to correct this. Trying to silence honest lenders is not the right way is it? Do you advise your clients to publically threaten forum members? I doubt it.
And once again, this review is my personal, private and unpaid opinion. I do not wish any ill feeling towards any member of Yes Secure or Zopa, I hope that is clear to all reading this.
15
Comment solely written on my personal observation, as working in online marketing for long years I can understand impact of negativity over internet driven business.
May be criticism is constructive but your advices are fairly damaging for any upcoming business.
I am also not great admirer of YS neither zopa but love to see peer to peer lending idea growing
14
And I quote from my post above “This review is only my opinion. You should seek further advice before investing in any scheme.” I am a private individual who lends on both Zopa and YES-Secure.
So you can understand why I am concerned about the forum posts regarding APR wording. As you should be aware Abby, the CEO of YS has agreed to an independant review of the APR calculations and APR/AER wording guidelines.
I am not in employment of ANY lending company, neither am I in the ‘Lending Business’. By attacking Zopa investors in your post above you are driving away probably the largest source of funds for YS loans. You should not be afraid of constructive criticism.
Most of the initial software bugs at YES-Secure were helpfully pointed out by Zopa Lenders, did we get thanks? No, we got threatened on the Yes Secure forum with legal action against us. You can understand why at this moment in time I am sticking with Zopa.
Once again, this review is my personal, private and unpaid opinion. Free thought, what a radical idea ;p
13
Nature of comment drives to conclusion “Half Term Dates” is employed by competitor to create negative image about YS as a part for well planed campaign”
There is nothing threatening for lenders of yes-secure on OFT guideline just need to clear some points. yes-secure fully comply with OFT as there is no lending and borrowing fee for lenders and borrowers, interest charged on loans will be effective APR accepted by borrowers.
No point of relaunch
, YS is live and continue to be deliver innovation for there loyal members, great peer to peer lending and borrowing web market place offers help to all segments of our community.
Zopians and payday lenders are not happy with innovation because of its social nature that allows everyone to participate without being hardcore lender or money shark, you can help your borrowing friends with some extra cash (money that dying in your saving accounts)
I do advice to you seek advice before investing higher amount in YS or zopa.
12
The latest serious issue at Yes-Secure is allegedly the incorrect formula and wording being used to display a borrowers APR for their loan, potentially making current loan agreements unenforceable in UK law. Teething problems with their IT or maybe a lack of research into the OFT guidelines. Only time will tell. Yes there are more active listings now but a high percentage still end not fully funded due to a lack of investor confidence. It has been suggested Yes Secure should close down, fix the possible legal issue and IT bugs and relaunch later in the year. At the moment the reviews from the investors are not looking good. This review is only my opinion. You should seek further advice before investing in any scheme.
11
its too early to say any thing terry, why so negative over competition, bugs are part of system even 5 years of development zopa facing gray listing issues .. so you are quitting with zopa
i gone through YS board for “bad-debts” sounds crazy to read form experienced zopa lenders, i believe bad-debts are not marketplace specific(its nice to have more authentic data like zopa), based on credit information providers.
Zopa lenders:
make use of your experience in making lending offers on YS
New lenders :
start with tiny amount to learn how peer to peer lending works on YS or zopa
Borrowers : Make use of connections, possible you may manage to gate lower rates (after all we are some way helping people we know / its nice to pay back to people helped us
)
my YES to competition
10
A simple viewing of the forum on YES-secure at the moment will make it very clear that YES-secure is in no position to be operating at the moment. There are numerous bugs on the website, a couple of serious security issues (one appears to have been fixed, the other not) and there is nothing useful in the way of expected bad-debt rates (so lenders offer money at the peril). Responses to queries on their forum also lead you to question even their own knowledge of the important subject area of bad-debt.
I invested a small amount of money on the website as a lender, but following my experience and what I’ve learned there over the last 3 weeks I’ve decided to withdraw it and give YES-secure a wide berth. If they fix the problems then I’ll return, but my advice to them would be to take the site down, carry out some more testing, research the requirements (for both lenders and borrowers) from a P2P service provider, and only then try relaunching.
9
YES-secure is just 15 days young and doing really good as expected to be considered as a new player and sharing market with 5 year old zopa, its not fair to kill competition within 15 days of experience. It’s got some aces up its sleeve
-It looks promising to have 100 plus users in 15 days (3 weeks 40+34+30)
-50k + available fund for lending
-6 Live borrowing requests
-No fee for borrowers and lenders till next announcement
-Wide range of loan terms from 12 – 60 months
Being in IT for so many years, I can understand challenge of launching perfect product in first go, zopa also had similar issues in there early days
I don’t have rights to make any advice or recommendation,
On natural stand, let’s try
8
Im going to agree with Tim as I also have had £10 lending offers rejected by borrowers at YES-Secure. At the moment there are unanswered questions about default rates and I would advise cautious lenders to use Zopa until YES-Secure improves dramatically. Zopa has over 5 years of statistics and market data to help you make low risk lending choices.
At the moment YS only offer founder member fee discounts to new lenders with 10K to invest before Aug 31st 2010, so if you intend to invest a smaller amount, Zopa is the place to go to get started and learn the art of lending. YES-Secure need to make some serious changes to their business plan to become the new Zopa, you only have to look at the sub £9000 on offer to borrowers to see that serious lenders are waiting and not investing in YS at the moment.
And despite a lot of press releases YS have at the moment only 5 active loan listings, partially because they can not 100% fund any of these loans due of course to serious lenders avoiding them for the time being.
“How much money do you need to borrow? Zopa has a lending limit of £15,000. YES-Secure allows loans up to £25,000.” whilst this statement is true, statistics prove that over 15K the borrower default rate increases so lenders might not always be prepared to fund 25K loans.
If you actively take part in the Zopa forums you can learn a wealth of information from professional lenders and providing you are cautious and well informed you can make money at Zopa, those people that simply say Zopa is bad etc obviously rushed in and head first to the deep end and lost money. Zopa is not a get rich scheme, neither is YS. They are serious investment alternatives but you must learn the systems, the markets.
Would you seriously lend £100’s to people just because they are on your Facebook Friends list of live down the road? Probably not, so make sure you read through the hype about YES-Secure before you take the plunge.
The opinions expressed are my personal thoughts, you should always seek advice about ANY kind of investments or borrowing.
7
I’m a 2 year Zopa lender and just joined with Yes-secure to check the competition out. For seasoned P2P lenders there appears to be some odd lending patterns on YES-Secure, I suspect by core investors, which then calls into doubt the borrowers also. Having placed a lending offer, I have an email saying the borrower has rejected my £10. Ok it was at a high rate, but on a £10k listing it would have had minuscule impact on the overall rate and would almost certainly have been knocked off towards the end anyway. Clearly the lending and borrowing is being manipulated to create an impression that despite widespread coverage, they have only had 30 new lenders this week compared to Zopa which had 30 new lenders today before 9am!!!
Advise is to avoid Yes-Secure. They have only £9k in the markets lending pot today, so can’t even support a single large loan – we know from 5 years of Zopa that as funds draw down, interest goes up – strangely Yes-secure maintain competitive rates on these funds – again I think we can also see how and why.
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andrewtw, I don’t know where you were looking on Zopa’s site (or how long ago) but the information I can access shows in great detail how much time Zopa spends chasing late paying borrowers. This improvement started a while ago when they changed who handled it.
This does not mean that they can get it all back, they have to operate within UK law as YES-secure will do and over the last few years it seems that the law has moved to be on the side of the borrower rather than the lender.
5
It’s good to have some competition in this open market. After all, it will be in the benefit of users to have options. One thing must say, YES-Secure has come up with an innovation of employing social networking.
4
im afraid to say I have had very very bad service with zopa, havent tried yes secure but will do in the near future a fresh start for me and my money!!, zopa dont chase or care about borrowers or lenders take my advice DO NOT USE ZOPA!!
3
Looks like zopa paid Tim for comments
2
Yes-Secure has flagrantly copied the Zopa branding: the flat little figures, the imagery, even the colours.
Before lending or borrowing with these guys I would suggest people consider what sort of person would do that … and what does that tell you about how they are likely to treat their customers in the event of any issues ?
1
Hello,
By way of correction, I’d like to point out the following:
- Zopa has no lending limit (so the figure of £15k above is inaccurate)
- We do allow those who are aged 18 and over to use our listings