The lending calculator
The Lending Calculator is designed to help the potential lender understand the return that is possible given certain lending parameters. Various scenarios may be explored.
Users do not need to be logged in to enjoy these facilities. The Lending Calculator displays like this:
USING THE LENDING CALCULATOR
First enter the Amount You Wish to Lend - integers, whole numbers of pounds, no currency symbols, no commas and no decimal places.
Then select the Lending Term or duration of the loan or its repayment period, in months, from the list of available terms, for the lending of the above amount.
If the Lending Slice Size entry is available, enter the size or amount of each borrower loan participation, or "loan slice" size, rounded to the nearest £10. Enter just numbers, no currency symbols, no commas and no decimal places. It is sensible to lend in smaller amounts to limit the exposure to any one borrower, e.g. £20. If the Lending Slice Size entry is not available then the calculator is using the average loan slice size for the amount and term of the lending, based on recent loans.
If the Nominal Interest Rate entry is available then select the nominal interest rate you hope to receive on the lending amount above. If the Nominal Interest Rate entry is not available then the calculator is using the average nominal interest rate for the amount and term of the lending, in the calculation.
Then click the "Calculate" button.
The response will be:
1. Monthly income. This is your average monthly receipt of principal and interest payments on this lending.
2. Final value total. This is the amount that you will end up with, on full repayment of the principal amount and the interest on this lending.
3. The AER, the Annual Effective Rate, is calculated on the basis that any interest paid is combined with the original balance and the next interest payment will be based on the slightly higher account balance. In our case, payments are made monthly so there are always twelve compounding occasions in any year period.
4. The total fees for lending that amount for that term may be shown. Whether they are shown or not, the total fees taken into the calculation include the lender flat fees, the lender percentage fees and the compensation scheme fees over the period of the lending. No membership fees are included.
You may run this again and again using different combinations of figures to explore different styles of lending.
To assist in the use of this calculator, we have put helpful tooltips for most entries. Just hover the cursor over any label, entry box or selection and a tooltip will appear to assist you in your entry or selection. Tooltips are shown like this: