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.

Good to know

As part of our compliance with industry regulations we produce an ‘Outcomes Statement’ which summarises how our loan book has performed each year.  From 9 December 2019, this includes the actual rate of return on our different Products. You can see this on our statistics page.

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 reinvesting the proceeds. We always aim to minimise cash drag. Your interest is calculated daily as soon as your monies are invested.

A default is when the borrower is 180 days past the due payment date. Some defaults may result in late payment (which does not affect the actual rate, but affects when investors receive their returns) and others may result in non-payment or partial payment (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 set so that payment is automatically reinvested in new loans. Re-investing obviously means that you do not have the same access to your money as if you withdrew it.