Laura Whateley, a real money management correspondent at Zopa, a Fintech lender and digital bank, notes that at the beginning of the COVID-19 pandemic, it wasn’t really clear how our finances would be affected, and that might still be the case for many individuals and businesses.
Whateley points out that some workers who took a payment holiday or payment freeze in March 2020 (at the time that the Coronavirus crisis began to affect most countries) are now going back to work, or are reaching the end of furlough.
She adds that these people might now be in a better position to again start making payments. She recommends that if you can afford to begin repaying towards your debt, then you should be doing that.
Whateley said that Zopa is contacting clients before their payment arrangement ends, so that they can help their customers decide what they should be doing next. The Fintech firm provides a budget tracker at budget.zopa.com to assist customers with better understanding their incomings and outgoings. The company also provides an online form so that clients can report their circumstances.
Zopa acknowledges that many workers might be facing redundancy and uncertainty after their furlough period comes to an end. For these clients, Zopa will allow them to request a payment arrangement on “most borrowing products for up to three months from the point at which you ask, until October 31, 2020.”
Zopa has also introduced exclusive savings rates for current investors, which have been announced as the company prepares for its banking brand officially launching at some point this year.
The Bank of England (BoE) base rate is currently set at 0.1%. Lenders are able to access the term funding scheme, which means that there’s a lot of cheap capital available without having to acquire more deposits.
But if Zopa is planning to compete in this area, then it will have to offer good rates.
The company recently revealed that its savings range would be offering exclusive 1-year terms at 1.1% AER, 2-year terms at 1.4%, 3-year terms at 1.5%, 4-year terms at 1.55% and 5-year terms at 1.6%. Interest is reportedly fixed and will be paid into customers’ accounts each month.
If these rates were offered right now, then Zopa would be among the market leaders in the UK.
New or updated savings rates are regularly released by lenders. Zopa’s current rates are only exclusive rates being offered to its investors so the rates may vary once the company actually introduces its services to the larger market.
Zopa recently partnered with UK-based Paylink Solutions, a software developer that provides solutions for the lending and mortgage industries.
Zopa, which was recently awarded a full bank license, confirmed that it would be using Paylink’s cloud-powered online income and expenditure product suite, called Embark.
The software product will help Zopa’s team with gaining a better understanding of whether its customers can afford to spend on certain products or requirements, including those clients who have experienced challenges due to COVID-19 or other factors, and now might need some sort of payment plan.