Zopa has been providing secured car finance to our loans customers since 2017 and opened them up to our retail investors in June 2019.
These loans are in many ways similar to the unsecured personal loans we’ve always offered. Borrowers receive a set amount and then pay it back, plus interest, over a fixed period. The key difference is that the loan is a hire purchase agreement, under which the lender owns the vehicle until the borrower has paid back the loan. This means that if the person borrowing the money defaults, we can repossess and then sell the car, subject to meeting the conditions detailed in the Consumer Credit Act.
You can identify a secured car loan in your loanbook by looking for loans in the ‘A-Sec’ or 'B-Sec' markets (standing for A-Secured and B-Secured). They’re given that label because we expect these loans to have similar default rates to our unsecured personal loans in risk markets A and B.