Peer-to-Peer Lending ROI Calculator

Expected return from P2P lending by risk grade.

Investment amount ($)

Loan term (months)

Gross interest rate (%)

Expected default rate (%)

Platform fee (%)

Recovery rate (%)

Reinvestment delay (days)

Alternative yield (%)

Tab to move between fields

Net return ($)

$1,485.99

≈ 11 pairs of sneakers

Annualized net return (%)

4.95%

Excess return vs. alt ($)-$14.01

Gross interest income$1,957.15

Net default losses$360.00

Platform fees$19.18

Cash drag cost$52.83

Alternative investment return$1,500.00

How to Use This Calculator

Enter Investment amount ($), Loan term (months), and Gross interest rate (%).
Set Expected default rate (%), Platform fee (%), and Recovery rate (%).
Adjust Reinvestment delay (days), Alternative yield (%) as needed.
Review Net return ($) ($) and Annualized net return (%) (%).
Use Excess return vs. alt ($) ($) and Gross interest income ($) to inform your decision.

How the result changes with Loan term (months)

Investment amount ($): Total capital allocated to P2P lending.
Loan term (months): Average loan duration (common terms: 36 or 60 months).
Gross interest rate (%): Average gross interest rate on loans. Grade A: ~6-8%, Grade C: ~12-15%, Grade E+: ~20-30%.
Expected default rate (%): Percentage of loan principal expected to default. Grade A: ~2-3%, Grade C: ~7-10%, Grade E+: ~15-25%.
Platform fee (%): Annual service fee charged by the platform on received payments (LendingClub: 1%, Prosper: 1%).
Recovery rate (%): Percentage of defaulted principal recovered through collections. Typically 5-15%.
Reinvestment delay (days): Average days cash sits idle before being reinvested into new loans (cash drag).
Alternative yield (%): Annual yield on alternative fixed-income investment (e.g., Treasury bonds, high-yield savings) for comparison.

Net return ($): Total net return after defaults, fees, and cash drag over the loan term.
Annualized net return (%): Net return expressed as an annualized percentage — the key metric to compare across investments.
Excess return vs. alt ($): Additional return earned compared to the alternative fixed-income investment.
Gross interest income: Total interest earned before any deductions.
Net default losses: Principal lost to defaults after recoveries.
Platform fees: Total platform service fees over the loan term.
Cash drag cost: Estimated opportunity cost from reinvestment delays.
Alternative investment return: What you would have earned in the alternative investment over the same period.

Identify Input Parameters
4 parameters
Investment amount ($) = 10000, Loan term (months) = 36, Gross interest rate (%) = 12, Expected default rate (%) = 4 = 8 input(s) provided
Calculate Net return
Net return = grossInterestIncome - netDefaultLoss - lostInterest - platformFees - cashDrag...
1485.99 = $1,485.99
Calculate Annualized net return
Annualized net return = loanTermMonths > 0
4.95 = 4.95%
Calculate Excess return vs. alt
Excess return vs. alt = netReturn - altReturn
-14.01 = $-14.01
Calculate Gross interest income
Gross interest income = totalPayments - investmentAmount
1957.15 = $1,957.15