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Progressive Zopa Open Doors for Young Adults

31-July-2008, Writes Dan Drage dan.drage@consumerchoices.co.uk

For 20 to 25 year olds, obtaining a loan can be difficult. Social lender Zopa believes it has the solution to this problem.

Individuals in the 20 to 25 year old bracket often struggle to have their loan applications accepted, hampered as they are by a limited credit history. Zopa (www.uk.zopa.com), the first social lending network of its kind, has launched its new ‘Young Markets' service to help those aged 20 to 25 obtain unsecured loans.

In keeping with Zopa’s existing acceptance criteria, young people with damaged credit histories will still be declined. Those with limited or non-existent credit histories however will be able to apply for loans subject to routine identity checks.

Zopa lenders can choose to make offers to these young applicants, with the added attraction of being able to charge a higher rate of interest because of the higher risk that these as yet unproven younger borrowers represent.

Whereas the safest borrowers coming to Zopa can typically get a £5000 loan over 3 years at around 8.5%, Young Market borrowers will be able to get the same loan at around 12.5%.

Giles Andrews, UK Managing Director and cofounder of Zopa, had the following to say:

“With our Young Markets launch we are delighted to be offering this unique service to young adults who have been unnecessarily blocked from accessing competitive loans up to now simply because they have a very limited credit history”

He continues:

“Lenders are already telling us they are enjoying helping young responsible adults poorly served by the banks.”

Chris Eagle, Commercial Manager at Credit Choices, has his own viewpoint:

“Lenders will be delighted when they’re lending at 12.5% as opposed to 8.5% and I think its obvious why. This is a useful avenue for young borrowers to go down though, but you should always ask yourself if you really need a loan before applying for one.”

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