Zopa

Zopa is a digital bank that lends, takes savings and runs an app-only current account. It started life in 2005 as the first peer-to-peer lending business, specialising in loans to consumers¹, and today Zopa Bank says it is trusted by over 1.5 million customers². It has no branches: the Biscuit current account is fully digital and app-only³.

Its range covers most of what a high street bank offers, minus the branch. Personal loans and car finance, a credit card, retail finance at retailers' checkouts, savings pots, a Cash ISA called the Smart ISA, a Stocks & Shares ISA and the Biscuit current account. Zopa also runs the DivideBuy retail finance brand alongside its own name⁴.

What Zopa offers: loans, car finance, savings and the Biscuit current account

Zopa's product range is built around borrowing and saving. On the borrowing side it offers unsecured personal loans, car finance in three forms, a credit card and retail finance, which is the buy-now-pay-later style credit you can select at some retailers' checkouts. On the saving side it offers savings pots, the Smart ISA (a Cash ISA) and a Stocks & Shares ISA for longer-term growth⁷.

The Biscuit current account is the newest addition. It is fully digital and app-only, and Zopa does not have physical branches³. Among its perks, Zopa advertises a free Caffè Nero drink every month for account holders⁸. Switching to it works differently from most banks: Zopa handles the move manually rather than through the Current Account Switch Service, which means you set up your Direct Debits in the app and the Zopa team supports you through the move³.

Retail finance is the part of Zopa many people use without noticing the brand. You choose Zopa as a payment option at the checkout of a participating retailer, fill in a short form and, if eligible, apply online with a valid UK debit card⁹. Zopa says this side of the business is trusted by more than 500,000 customers⁹. Repayment terms run from 3 months to 10 years depending on the retailer and purchase amount, and many retailers offer interest-free credit⁹. Zopa also runs the DivideBuy brand for this kind of credit⁴.

For saving, Zopa offers four types of pots (Easy Access, Limited Access, Boosted and Fixed Term) within one savings account¹⁰, plus the Smart ISA, which lets you mix and match easy access and fixed term ISA pots in one account¹¹, and a Stocks & Shares ISA with ready-made funds⁷. Each of these is covered in its own section below.

Zopa personal loans: checking your rate and who can apply

Zopa's headline offer on loans is speed and a soft first look. You can see the rate you could get on a car loan in about 3 minutes, and Zopa states that checking your rate does not affect your credit score because all loans are still subject to its normal credit checks¹². It says it can offer pre-approval to up to 65 per cent of applicants in as little as 12 seconds, and that it approves more than 300 loans each day to people with a good credit history¹².

The distinction that matters is between the eligibility check and the full application. The initial check is a soft search, which only you can see on your credit report. A full application involves hard searches, which Zopa's app terms say may impact your credit score¹³. The same pattern applies across Zopa's products: the credit card has an instant eligibility check with no impact to your credit score⁸, and retail finance uses both a soft search and a hard search, with the hard search leaving a record other lenders can see⁹.

Two practical points from Zopa's own terms are worth knowing before you apply. Credit is subject to status, affordability and applicable terms and conditions⁸, so the rate you see at the eligibility stage is not a guarantee. And once a loan is running, you cannot change the monthly repayment amount, because it was calculated to repay the agreed loan amount over the agreed term¹². If your circumstances change mid-term, the options are overpaying or settling early rather than reshaping the instalments. If you want to understand how borrowing decisions are made more widely, see credit scores and credit reports.

Car finance at Zopa: personal loan, HP or PCP

Zopa sells three ways to finance a car, and the differences between them come down to who owns the car and what happens at the end.

With an unsecured personal loan, you use the money you borrow to buy and own the car outright from day one¹⁴. With hire purchase (HP) and personal contract purchase (PCP), Zopa pays the dealership directly and the loan is secured against the car, which means Zopa owns the car until the loan has been paid off¹⁴. HP has fixed monthly repayments¹⁵, and Zopa notes that because HP is a secured loan the car can be repossessed if you do not keep up payments¹⁵.

PCP works differently. Monthly payments are typically lower than HP and personal loans because you are only financing part of the car's value¹⁴. You may need to put down a deposit at the start of an HP or PCP agreement¹⁴. At the end of a PCP agreement you can return the car, part exchange it for a new one, or pay an optional final payment to own it outright¹⁴. To make that final payment, Zopa's process is to open the app, go to the Borrow tab, click into your car finance and tap "Pay off your loan early", which generates a settlement letter with the payment details¹⁶.

Cars financed on PCP must meet Zopa's criteria: under 5 years old, driven less than 70,000 miles, and sold by a trusted dealership¹⁶. Zopa also runs checks on the car to ensure it is in good condition, and says it can help you find one, free of charge¹⁴. At the end of a PCP, two charges can apply: an excess mileage fee if you go over the agreed limit, with mileage only checked at the end of the agreement rather than each year, and payment for any damage outside the British Vehicle Rental and Leasing Association (BVRLA) Fair Wear and Tear guidelines¹⁶.

Ownership has consequences beyond the payments. Independent guidance confirms the general rule: with HP the finance company owns the car until you have made the last payment, and with PCP the finance provider still owns the car¹⁷. For that reason, a private sale of a car on PCP or HP is generally not legally permissible until all payments are finalised¹⁸. One protection applies across the market: the Consumer Credit Act gives you the statutory right to terminate an HP or PCP agreement at any time, known as Voluntary Termination¹⁸. For more on how these products work generally, see the loans guide.

Zopa savings and the Smart ISA: easy access and fixed term pots

Zopa's savings sit inside one account in the app, organised into pots. There are four types: Easy Access, Limited Access, Boosted and Fixed Term¹⁰. The savings account is only available in the Zopa app, so you need a smartphone, and it lets you manage your savings around the clock¹⁰. To open one, you download the app, create an account and choose Savings; existing customers tap the "+" button and select Savings¹⁰.

Fixed term pots run from 6 months to 5 years, and the interest rate is fixed for the whole duration, so you know in advance how much interest you will earn¹⁹. You choose how interest is paid: monthly into an easy access pot, or compounded within the fixed term pot itself¹⁹.

The Smart ISA is Zopa's Cash ISA, and it works on the same pot idea: you can mix and match easy access and fixed term pots in one account, and any interest you earn is tax-free¹¹. Opening one means downloading the Zopa app, opening a Smart Saver account and then choosing Smart ISA²⁰. Fixed Term ISA pots lock your money away for between 1 and 5 years at a guaranteed rate²¹. You can transfer all or part of an existing ISA in a few taps²⁰.

The rules on fixed term ISA pots are stricter than the non-ISA equivalents. Taking money out early closes the pot and incurs a penalty, and money taken out of an ISA within a tax year cannot be replaced²¹. Interest cannot be withdrawn while money is in a fixed term or notice ISA pot¹⁹. At the end of the term, the money moves into an easy access ISA pot, where you are free to withdraw it or reinvest it²².

Zopa also offers a Stocks & Shares ISA for longer-term growth, with two ready-made funds and investing from £1⁷. Charges on that account are taken from the account automatically as percentage fees, and Zopa publishes the current percentages and a worked example on its own site⁷. Unlike the savings pots, investments are not protected against market performance: they can fall in value⁷. For how these accounts compare with the rest of the market, see the savings guide and the ISA guide.

How banking with Zopa works: app, online and chat support

Everything at Zopa runs through the app. Its terms state that you can only open, view and manage your Zopa account through the Zopa app²², which is available for iOS and Android¹³. There is no online banking website in the traditional sense and no branch network. Statements are delivered monthly to the app, free of charge, on or around the same date each month²².

A few practical rules from the account terms are worth knowing. You can cancel the agreement without penalty, for any reason, up to 14 days from the date you open your account²². If you become a non-UK tax resident, Zopa will close your account and any savings account with immediate effect and return the full balance to another bank account in the same name²². Where the app uses open banking, Zopa asks every 90 days whether you are still happy for it to access your open banking data¹³.

Payments out of the account follow standard UK timescales. Zopa aims to send faster payments within two hours and will ensure funds are always sent by the end of the next business day²². It may delay sending funds by up to four business days from the date of the instruction where it has concerns, for example a suspicion of fraud²². If you are charged for a payment where the final sum was not reasonable, you need to ask for a refund within 8 weeks of the date the payment was charged to your account, and for unauthorised payments you need to tell Zopa within 13 months of the payment date²².

For recurring card payments, such as subscriptions, the rules are the same as anywhere in the UK. You can cancel by contacting the business taking the payment and asking it to stop, or by asking your card provider to cancel, and your card provider must cancel these payments if you ask²³. The Financial Ombudsman Service confirms you need to contact either the business or your card provider²⁴. Cancelling the payment does not end any underlying contract with the business.

Support is by chat and phone. Chat runs Monday to Friday 8am to 8pm and Saturday 9am to 5:30pm⁶. Phone support is available Monday to Friday 8am to 8pm and on weekends and bank holidays 9am to 5:30pm²⁵. For a wider view of how app-only accounts compare with branch banking, see the current accounts guide.

Keeping your Zopa account safe from fraud and scams

Zopa's security approach combines technology and membership of industry schemes. It encrypts your mobile banking data and uses a range of authentication methods, including passwords, PINs, biometric data and one-time verification codes⁶. It is a member of Cifas, the UK's leading anti-fraud organisation¹³, and partners with the Credit Industry Fraud Avoidance System on fraud prevention⁶. Zopa advises that passwords should be between 12 and 16 characters, using a combination of upper-case letters, lower-case letters, numbers and symbols⁶.

Zopa's fraud hub distinguishes between fraud, where examples include authorised push payment (APP) fraud, identity theft and money muling, and scams, where examples include investment and crypto scams, romance scams and social media scams²⁶. The distinction matters for refunds: where you are tricked into making a payment yourself, the bank's scam process applies.

If you think you have been scammed, Zopa's advice is to contact it immediately with the transaction details, a summary of the situation and any evidence ready to share, because the sooner you get in touch the better the chance of recovering the money²⁵. Zopa will try to get your money back from the bank you sent it to and may ask for additional information; it may also ask you to report the scam to the police so they can investigate²⁵. It can take up to 35 working days to resolve a claim, though usually less if enough information is provided²⁵.

For APP fraud on its own accounts, Zopa's terms commit it to refund the money you have lost within 5 business days of you contacting it, subject to an excess of £100²². Separately, if you pay for goods or services that never arrive, Zopa's dispute process asks you to contact the company first and give it 14 days to offer a solution, and to raise a dispute after 30 days if you still have not received the goods or a refund⁶.

General scam protection advice applies as much to a Zopa account as any other. The Take Five campaign advises using strong and unique passwords to protect your online accounts and stopping to check before acting on unexpected contact²⁷. For how scams work and your rights, see the scams and fraud guide.

Making a complaint to Zopa and taking it to the Ombudsman

Zopa takes complaints by phone on 020 7580 6060 and by email at complaints@zopa.com²². Its published process has fixed timescales. For most complaints, if it can resolve yours by the end of the third business day it will issue a written summary resolution within three business days, running from the day after it receives your complaint. Otherwise it must provide its final response within 8 weeks from the date the complaint was made²⁸.

Complaints about payment services follow a tighter timetable. Zopa sends an acknowledgement within 1 business day, then has 15 business days to resolve the complaint, or 35 business days where there are exceptional circumstances preventing this²⁹. Zopa publishes complaints data and updates the numbers every 6 months²⁸. One special case: complaints relating to a dynamic currency arrangement taken out before 28 January 2021 are handled under a different route²⁸.

If you disagree with Zopa's final response, you may refer your complaint to the Financial Ombudsman Service, and you need to do so within 6 months of the final response letter²⁸. The Ombudsman's own process is that you make a formal complaint to the company first; if it does not send you a final response letter within eight weeks, or you are unhappy with the response, you can bring the complaint to the Ombudsman²⁹. Your case is assigned to a case handler who will get in touch when they start to investigate, and they may ask for more information to understand what happened. The Ombudsman is free to use. For your wider rights when things go wrong, see the consumer protection guide.

FSCS protection: how your Zopa savings are covered

Because Zopa Bank holds a UK banking licence and is authorised to accept deposits, the money you hold with it is protected by the Financial Services Compensation Scheme. Your eligible deposits, meaning the money you hold with Zopa, are protected up to a total of £120,000 by the FSCS²⁰. That covers money in a Zopa bank account or savings account³, and money held in a Cash ISA counts within the same £120,000 deposit protection².

The FSCS confirms that its deposit coverage includes deposits, current accounts and savings accounts³⁰. The £120,000 limit is per person per banking licence, so if you hold money across a Zopa current account, savings pots and a Smart ISA, it all counts together towards one limit. You can check what is protected using the FSCS's own protection checker³⁰.

Investments work differently. Eligible investments in the Zopa Stocks & Shares ISA are protected up to a total of £85,000 by the FSCS⁷, but that protection covers the failure of the firm holding your investments, not the performance of them. The FSCS does not cover losses from investments falling in value³, so money in the Stocks & Shares ISA can go down and stay down, and no compensation follows from that alone.