Zopa

Zopa has been around for 4 years and allows people with spare money to lend it to those who are looking to borrow money. It is an online money exchange and aims to offer a higher return for those lending money and a lower rate for those looking to borrow money as it is effectively removing the middlemen.

According to Zopa's website lenders have made returns of over 9% over the last 12 months which is very high given that the average UK bank savings account is paying less than 1% at the moment. However, lending money is always risky and an economic downturn like the one we are currently experiencing often leads to large numbers of people being unable to repay their debts. If this were to happen lenders could find it difficult to get their money back - even from people with a good credit history. On saying that Zopa lenders have experienced bad debts of only 0.18% to date.

There are a number of safety measures in place for lenders and these include every borrower being risk assessed, credit checked and identity checked. To reduce your risk your lendings are spread across a number of borrowers so that if you lend £500 your money is spread across at least 50 borrowers. Also if someone does miss a loan repayment collection agencies are used to recover the debts.

If you fancy making money by lending money then take a look at Zopa for more details.