Internet loan pioneer turns to car deals

THE peer-to-peer loan provider Zopa has joined the boom in car sales by offering finance to buyers.

Zopa was a pioneer of peer-topeer loans, where savers lend their cash to another individual or business and are paid interest in return.

This sector, largely internet based, is growing rapidly as the interest paid on the loans beats the rates available in High Street savings accounts, while borrowers can get a loan at a lower cost than they could through the bank.

The risk is that if the borrower defaults, the saver could lose the cash. Some £715m was lent out in this way in the first three months of this year. Now Zopa is looking to tap into the car finance market. Zopa Car ReFi will let drivers with existing car finance deals swap out of their contracts and take out a new loan.

Zopa pays off the existing finance deal directly with the provider and then gives the driver a new loan, with the car as the security on the agreement. Only vehicles up to 10 years old will be eligible and drivers must be at least 20 and earn a minimum of £12,000 a year.

The Finance & Leasing Association said consumers bought 184,546 new cars through finance in March.

Jaidev Janardana, chief executive at Zopa, said: ‘We want to disrupt the car finance market in a positive way and drive down the cost of car ownership.’