As banks continue to tighten their loan criteria, Zopa, the world's first person to person online lending exchange has seen a surge in the amount lent through its service.
Since January this year, Zopa loans
has seen the amount lent through its social lending scheme increase by 35 per cent, bringing the total amount lent to £40million.
Commenting, Giles Andrews, managing director and cofounder of Zopa, said: "Anyone who thought person to person lending was just a fad must now agree that Zopa's members have proven it is far more than that.
"It is rapidly growing into a new, mainstream solution that delivers better value and unique solutions for both borrowers and savers, the people most badly let down by the traditional ways of doing things."
Zopa works by charging borrowers a small fee and taking an annual fee based on a small percentage (currently one per cent) of a lenders' annual loan
amount. The amount and interest rate offered by a lender will depend on the borrowers' credit rating.
As a result, lenders enjoy an easy way to make returns – the average return on all money loaned last year was 8.8 per cent – while borrowers enjoy competitive interest rates by cutting out the middle man.
Mr Andrews added: "As banks continue to try to rebuild their damaged balance sheets at the expense of their customers through running some of the largest spreads between savings and loan rates we've ever seen, rapidly increasing numbers of people are discovering how they can get a better deal for themselves and the people they are borrowing from.
"Person to person lending is here to stay because it works – and to the genuine mutual benefit of Zopa borrowers and lenders," he concluded. Compare loan deals »
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