We’re fortunate that we don’t need a loan, but at the moment we’re trying to find places to invest our hard earned (!) dosh. ISAs have a low return; Premium Bonds are dire; so what else is there?
Well we found ZOPA which is a sort of Internet Loan exchange, where savers lend money to borrowers at a rate they both agree on. Its actually simpler than that, and safer as well as you only lend a small amount to each person and you can decide what level of risk/return you want. The company is backed by a lot of known investers and also is managed in such a way as to minimse risk of bad debt (that can happen – though Zopa do chase debts down).
I’m fairly new to it, but my loan book is currently averaging over 8% returns (minus fees/bad debt) on low risk markets, so using real figures I should get more than 6.5% cleared return….. Its actually easier than you think 🙂
The main downside for lenders is that if you lend, say, £3,500 over 3 years, then if you want your money back it may take 3 years for you to get all the money back (at c. £100pm) – but if you can live with that….
On the flip side, if you are a borrower, you get a flexible low-rate loan you can over pay as you wish….
Zopas ads above which will give you more information.