Banks 'not the best source of loans' - 18/12/2007

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According to loans network Zopa, consumers may find a better deal through its own system than through that of banks.

The company has cited the credit crunch and the subsequent tightening of borrowing restrictions by banks and building societies as indicative of the relatively poor value to be found in this sector.

Its own product offers customers the opportunity to borrow or lend money through a social networking style-service, sidestepping banks and other lending institutions.

It pointed out that the interest on a £3,000 loan borrowed for six months would be 6.6 per cent with Zopa, compared to 7.9 per cent with Abbey, 10.8 per cent with Sainsbury's and 12.9 per cent with First Direct.

The firm's managing director Giles Andrews said that a loan with the company could be the ideal "gift" for Christmas.

"Borrowing from people through Zopa rather than from banks can slash the interest rate you pay and help hugely towards getting the debt paid off as soon as you can in the new year. The fact that you can repay your Zopa loan at any time without early repayment charge makes the Zopa option even sweeter," he said.

PayPal has recently warned consumers against borrowing from friends and family, advising anyone who gives a loan to a loved one to ensure it is paid back.

© Adfero

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