The actual rate of return that we publish, is the amount of interest earned by all investors in a single product (Premium, Premium Plus, High Net Worth) over the course of the calendar year. This rate includes the effects of ‘cash drag’, ‘defaults’ and investors benefiting from ‘compound interest’ during the period.
As part of our compliance with FCA industry regulations we produce an ‘Outcomes Statement’ which summarises how our loan book has performed each year.
The results are published from 9 December 2019, this includes the actual rate of return on our different Products. You can view these on our statistics page.
Good to know
Cash drag is the effect of your money being held in cash before we are able to fully allocate it to loans on the platform. This can happen in the time between you initially investing and us placing your funds in active loans. Cash drag can also occur between a loan being repaid and us re-investing the proceeds. We always aim to minimise cash drag. Your interest is calculated daily as soon as your money is invested in live loans.
A default is when the borrower is 180 days past the due payment date. Some defaults may result in late payments (which does not affect the actual rate, but affects when investors receive their returns) and others may result in non-payment or partial payments (which reduces the actual rate). We publish the default rate on our statistics page.
Compound interest is when you earn interest on your interest. In order to maximise your earnings the default setting on your account is for your interest payment to be automatically invested into the first available loans.