15030086-Zopa - The History of Zopa Zopa(zone of possible...

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The History of Zopa Zopa (zone of possible agreement) peer-to-peer lending is a London based company and one of the oldest world’s money lending organization. The institution is enabling the savers to lend directly to businesses and people in need of loans at lower rates. Giles Andrews, J. Alexander, R. Duvall, T. Parlett and D. Nicholson founded the company in 2004 but launched their operations in 2005. The internet based social lending has brought together lenders and borrowers, connected them through their listings (borrowers) and markets (lenders). Therefore, instead of people walking into banks to get loans, the borrowers are matched with the lenders, who aim at making profit from their money; the two parties are brought together into agreeable terms where they can conduct their operations freely. The United Kingdom based company later on operated in Italy, United States and Japan but under a somewhat different model. The organization of zopa was such that the requests to borrow money were categorized under listings while those ready to lend were on the Markets category. However, listings were later done away with in 2011 and three market systems were introduced (Jenkins 2014). To gain the borrower/lender trust, strict online credit checks are performed on borrowers who are cleared based on their credit history, if the borrower has a history of defaulting, then chances are high that he/she will be denied the loan. There are two kinds of loan terms, short-term loans (to be repaid within 24-36 months) and the long-term loans (repaid between 48-36 months), the policy was later on altered to include a twelve months period for the short-term loans. As of 2013, the company was able to match borrowers with the lenders who were ready and willing to disburse their loans; the matching was done after clearing the borrowers with the credit department and making sure that there was enough available money to be disbursed.
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The managers running zopa saw a great investment opportunity in peer-to-peer lending due to the rising need for loans, the people would opt for places where they would acquire the loans at lower interest rates and without the strenuous and lengthy procedures involved in the banks. During the times when zopa started, few agencies had started the internet based lending but had not thrived very much in the society. The borrowers suffered from the poor services and great interest rates that the traditional banks offered while the lenders, on the other hand, did not have any ideas on how to earn returns from their money apart from saving in the banks. The Opportunity that Zopa’s Managers saw in Peer-to-peer Lending. Therefore, there was not only an opportunity but also a lifetime investment since the P2P would ease the burden that the borrowers went through getting their loans from the banks. In addition, it would enable the lenders to find ways to gain returns from their money. The idea of the managers was that by cutting down on the costs faced by the traditional banks, they would be able to offer
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