The service, called Zopa (Zone of Possible Agreement), is free to lenders and they are able to choose the rate of interest they would like to charge. Borrowers will have to pay a fee of 1% of the loan to Zopa. Customers will be able to borrow between GBP2,000 and GBP15,000, while lenders will be able to offer credit from GBP500 to GBP25,000.
The company said the aim of the program is to change people’s feelings towards money by effectively cutting out the middleman, in a move similar to that deployed by EBay and online betting exchange Betfair.
Richard Duvall, chief executive and formerly launch director of Egg, said he hopes that investors will benefit from an average return of 6-9%, while interest rates will fall by around a fifth lower than the typical bank rate.
The venture is backed by Benchmark Capital and Wellington Partners, the venture capital firms.
