Zopa US – Worth the Wait?

I’m tardy in posting on Zopa US. In a nut shell, their system here works in the following way:

  1. You buy a CD from a credit union, which you have to join.
  2. I take an unsecured personal loan from the credit union, which I have to join.
  3. If you like me or my project you can contribute interest from your CD to reducing my interest payment.
  4. Zopa earns fees originating loans and servicing them.  Do they also earn a fee for each new credit union member?
  5. The credit union earns the spread between the CDs  and the rate on the unsecured personal loan.
  6. The credit union takes the risk of loss.
  7. Presumably the credit union offers both of us additional products making this potentially a lower cost member acquisition channel for them.
  8. To the extent that CD’s exceed underwritten loans, the credit unions have a new source of deposits.

I like the participation of the credit unions and the potentially viral nature of getting family and friends to subsidize a loan, but I think we’ll have to wait and see how Zopa and the credit unions extend the platform before we really know the potential of the model.


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