Zopa today announced it has cut the APR of its loans down to 4.4% Representative APR for consumers looking to borrow between £7,500 and £15,000 over 3 to 5 years.
This new rate is currently the cheapest on the unsecured personal loans market and is a direct move to take on the supermarket and traditional banking lenders.
Despite recent news from uSwitch last week that peer-to-peer lending was unpopular with eight in ten savers, the borrowing aspect of the industry continues to make strides against the popular high-street brands.
Borrowers looking for a loan over 3 or 5 years for £7,500 to £15,000 will be offered a loan at 4.4% Representative APR.
What is peer-to-peer lending?
Peer-to-peer lending platforms such as Zopa allow consumers to save their money that will then be used to lend to other consumers.
However, savers are not protected under the Financial Services Compensation Scheme (FSCS), like they would be with a bank or building society.
The FSCS means that if the bank goes bust you will be compensated up to £85,000.
While peer-to-peer lenders have been keen to negate this fact with their own protection schemes, savers are not totally covered.
Nonetheless, the savings rates are highly competitive and beat some of the best offers available.
Similarly, consumers looking to borrow money have been able to get better rates from peer-to-peer lending, than with the loans from supermarket and banking brands.
Zopa loans soft credit check
Zopa borrowers are also provided a personalised soft search quote which does not impact their credit score.
This rate is the final APR customers pay once their loan is approved, so the 4.4% rate is not always guaranteed.
Borrowers are also rewarded by Zopa for paying loans back early with no early repayment fees, which might be an extra incentive for potential customers.
Lowest loan rates
Giles Andrews, CEO of Zopa said that his company was providing “real value” to UK consumers.
“We operate to reward people who are good with their money,” he said.
“By going under 4.5% Representative APR this signals an exciting opportunity for us and future for the peer-to-peer industry as a mainstream option for borrowers looking for unsecured personal loans.”