An origination fee is added to the total of every loan taken out. The fee is rolled into a borrower’s Annual Percentage Rate (APR) along with their fixed annual interest. Origination fees are calculated based on factors such as the risk market of the borrower. Please note, this is separate to the loan servicing fee, which you can learn more about below.
Loan servicing fee
We apply a loan servicing fee to each loan contract, which is deducted directly from each borrower repayment before the principal and interest is passed on to investors. The cost of the loan servicing fee may vary between investment products.
A loan servicing fee is: A monthly fee, calculated using the Zopa Servicing Rate under the Loan Contract to cover the cost of administering Loan Contracts and which may include a Safeguard Contribution (to the extent that the full amount for the Safeguard Contribution was not included in the Borrowing Fee)
1% loan sale fee
We charge a 1% administration fee when selling loan in Classic, Core, and Plus. This is applied to the proceeds from successful loan sales, and deducted from the final amount before being put into your holding account.
We will always display an estimate of the 1% loan sale fee cost before you confirm your loan sale. However, this is an estimate, and may change (for example if we can’t sell the full amount you have requested).
Market rate adjustment fee
In the event you wish to cash out any Market Loan before it is repaid by selling it to another investor, there may be a market rate adjustment. This means you may not receive the full value of outstanding capital of your loan if it has a lower projected return than an equivalent new loan today.
Example: You may try to sell a loan with £10 of outstanding capital. If the projected return for a similar new loan today is the same as your loan and the borrower has not missed a repayment, the buying investor will pay you £10. If the projected return for a similar new loan today is higher than your loan and the borrower has been inconsistent with repayments then an appropriate market rate adjustment is made and the buying investor may pay you £9.80.
Any outstanding capital deducted from the buying investor’s purchase price represents the additional projected return they would expect to earn if they had acquired an equivalent new loan today.
Any market rate adjustments consider interest rate changes and how well your loans have been performing to date.
We regularly update our Principles.