No. of Recommendations: 2
Hi BrummieDave,

In my view 5% interest is fine. After tax it is still above inflation. Therefore, OK.
However, when Zopa first started you could loan to differing 'risk' sectors, some of which paid interest of 13% or more, and although defaults were more for the riskier class, overall the riskier class was better in terms of total amount received.
So, in my view, 12% or more returns are well worth the possible defaults.
Also, what I cannot understand is that some of the 12% returns are available with asset backing (often property and with only 70% Loan to Value), and also with a safety net fund. So it seems you can get better returns with less risk!!! But why are asset backed loans paying more than unsecured?

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