Lenders Glossary


Finance jargon can be confusing, so we've put together this handy list of terms to make understanding these terms a little easier.


Everyone who signs up to Harmoney will need to create an account. Creating an account does not commit you to anything.

Actual performance

The real outcome. The result of operations and decisions. Not forecast, the factual outcome.


This is when a rate, such as an interest rate or a rate of return on investment, is expressed as a yearly value, even though it may not directly relate to a full year. For example, if there has been 2% interest after one month, this can be recalculated to an annualised return by multiplying by 12, resulting in an interest rate of 24% per annum. As with this example, all annualised rates are often theoretical, and there is no guarantee that it will be achieved.


This is the legal term for any repayments that are currently overdue, having missed one or more scheduled repayment dates. If a payment goes into Arrears, borrowers are charged anOverdue Fee.


Borrowers refers to everybody who has a loan, or is in the process of applying for a loan.


The Credit Contracts and Consumer Finance Act 2003, also known as CCCFA, is one of the 21 pieces legislation that Harmoney is subject to.

Find out more about the CCCFA

Charge off

When a loan is charged off, it means theborrowerhas defaulted on the loan and there is a high probability that no further money will be collected from the borrower.

Consumer credit

Consumer Credit means any credit, or borrowed funds, made available to everyday consumers, as opposed to businesses. This includes personal loans but may also refer to other products such as mortgages, overdrafts, or credit cards.

Credit data

In general terms this refers to all the data associated with the performance of a loan portfolio and/or the credit underwriting processes that deliver that performance. It is sometimes used more specifically to refer to a borrower’s profile, including their credit bureau file.

Credit grade

Also known as a Credit Score, or Risk Grade, a credit grade is a ranking of a potential borrowers creditworthiness based on a level analysis of their credit files and credit history. Harmoney assesses every application against our credit scorecard and assigns a Credit Grade from A1 – F5.

Credit scorecard

This is a mathematical model used to estimate the probability that a borrower will display a defined behaviour (e.g. loan default, bankruptcy, etc.). Harmoney has a bespoke Credit Scorecard, which it uses to assess every borrower. The Harmoney Credit Scorecard has been tested against existing credit scorecards in the New Zealand market and been proven to be more robust in most cases.

Credit performance

This refers to how a loan has behaved in relation to scheduled payments that had to be made. Where a loan has been repaid on time according to the loan schedule then it has performed well, if paid later than schedule it is poorly performing. The term is often rolled up to refer to the collective loan behaviour, to describe the “credit performance” of a loan portfolio.


A single secure place online to view all the relevant information related to your Harmoney account. This includes an up-to-date statement of your loan repayments, as well as any messages and warnings.

Establishment Fee

This is a one-off fee charged by Harmoney to borrowers when they take out a loan. This fee is added to the total amount of a loan.

Financial Markets Authority (FMA)

The Financial Markets Authority (FMA) is the governing body that regulates financial services providers in New Zealand. Harmoney’s Peer-to-peer operating license was issued by the F.M.A.

Find out more about the FMA


Every loan is divided up (fractionalised) into $25 chunks, which we call notes. So, for example a $10,000 loan will have 400 notes ($10,000 ÷ $25 = 400). This is a legacy from Harmoney's origins as a peer-to-peer lending platform, as it simplified processing when each loan was funded my multiple lenders.


Harmoney and its related companies/entities do not guarantee any return/yield, nor do they guarantee that a borrower will fulfil its loan obligations including making payments as and when they fall due for payment.


This is the return before defaults, fees, and taxes are taken out. This is opposed tonet.

Interest rate

This is the rate at which interest is paid by the borrowers each year. Specifically, the interest rate is a percentage of theprincipalwhich the borrower will repay over and above the principal repayments each year. The interest rate is fixed for the term of a loan.


Loans that have been reviewed and approved, and where the borrower has accepted their loan terms.


Providing borrowers with the funds for which they have been approved, and which they have agreed to pay back under the terms of their loan.

Listing ID

A unique code assigned to identify each individual loan listing, while keeping the identity of theborrowerprivate.

Loan book

The collective term for all loans originated on the Harmoney platform and the collective value of receivables (i.e. what is expected to be repaid).

Loan portfolio

Often used interchangeably with ‘loan book’ it refers to a collection of loans. It can refer to a subset of the ‘loan book’ such as a specific Lender’s loan portfolio, which would be loans funded by them alone.


This is the return after defaults, fees and sometimes taxes have been removed. This is opposed to gross return.

No guarantee

Harmoney and its related companies/entities do not guarantee any return/yield, nor do they guarantee that a borrower will fulfil

its loan obligations including making payments as and when they fall due for payment.


Under the Harmoney model, every loan is divided up (fractionalised) into smaller chunks of $25, which we call notes. So, for example a $10,000 loan will have 400 notes ($10,000 ÷ $25 = 400). This is a legacy from Harmoney's origins as a peer-to-peer lending platform, as it simplified processing when each loan was funded by multiple lenders.

Number (#) of Enquiries

When a person applies for credit and a credit provider requests a copy of the applicant’s credit report, that places a record of ‘enquiry’ on the credit file (regardless of the application outcome). The count of these enquiries (amongst other things) is of interest to credit providers when assessing credit risk.


Per annum, per year

Payment Protect

Payment Protect is an optional payment waiver product offered to Harmoney borrowers. It offers protection to help borrowers during unexpected events that may impact their ability to make their loan repayments such as involuntary redundancy, bankruptcy, disability, or death. It is not an insurance product but instead allows for some payments, meeting the conditions of the Payment Protect policy, to be waived under certain circumstances. The borrower pays a set fee for Payment Protect if they choose to take it up, and that fee is added to the loan.

Personal loan

This is a loan that is granted for personal use; usually unsecured and based on the borrower's integrity and ability to pay.

Portfolio return

The monetary return of all the Loans made on the Harmoney platform. It is also known as the index return.


This is when a borrower repays its loan before the agreed terms. A borrower can make a prepayment at any time and without notice. borrowers are not charged any additional fees for pre-paying their loan early.


This is the amount of money borrowed or invested excluding interest incurred or paid.

Principal outstanding

The amount of principal currently still outstanding on a loan. As borrowers pay off their loan, the principal outstanding reduces.

Realised annual return

Realised Annual Return (RAR) is a measure of the actual rate of return on funds invested on the Harmoney Platform. As RAR is based on historic performance that may not be a good indicator of future returns.

In simple terms, RAR takes the income from lending (interest) and deducts the costs you have incurred (credit losses and Service Fees) to provide your net return. This is then divided by the average principal outstanding and annualised to provide your Realised Annual Return or RAR.

You can see your portfolio RAR in your lender dashboard. It is important to note that RAR is first calculated 90 days after you make your first investment. Until that time no measure of RAR will be available. RAR is a dynamic calculation that will change based on transactions in your portfolio, if there were no further transactions the RAR would remain at its current rate.

RAR does not include tax in its calculation as each lender’s tax situation may be different.


This refers to the various government departments that have been charged with overseeing the implementation of, and ongoing compliance by peer-to-peer providers with, legislation introduced by parliament. For example, see FMA or CCCFA.


A return is the profit made from an investment, net of any fees or losses. It can be gross or net, expressed as gross or net. Gross return is interest earned. Net Return is with fees and losses (and sometimes tax) deducted.

Harmoney and its related companies/entities do not guarantee any return/yield, nor do they guarantee that a borrower will fulfil its loan obligations including making payments as and when they fall due for payment.

Repeat borrower

A current borrower who has decided to repay their current loan in-full and replace it with a new loan and borrow more; if their credit grade allows it. This new loan is referred to as a re-write.

Service fee

This is a fee charged to lenders for the processing and management of loan repayments. Amongst other costs it covers the cost of the Customer Service and Collections team as they work to ensure borrowers maintain regular scheduled repayments.

Static loss rate

Sometimes referred to as a static pool analysis. The pool is usually a pool of loans written in a specific month (referred to as a cohort).

Each cohort, each month, has a calculation done of loss (charged off accounts) divided by the total loan value for the cohort in the first month. These values are then plotted.

Within a chart, you will normally see a line for each cohort, all starting month 1 (which means that each cohorts line will be 1 month shorter than the previous cohort).

The resulting lines can all be compared to every other cohort to see how much of the months loans as a percentage have gone to loss compared to other cohorts at the same point in time.

This tells us whether a particular month performs better or worse.

All of these cohorts can be rolled into 1 group, to show the total static loss for the portfolio.

Unsecured loan

An unsecured loan is one that is obtained without the use of an asset as collateral for the loan


This is when one or more monthly repayments are waived, i.e. the borrower does not need to pay that repayment.

Weighted average

Rather than a straight average, a weighted average is when each component is assigned a weight. These weights then determine the relative importance of each component. Weightings are the equivalent of having that many like items with the same value involved in the average.


All approved borrowers who have accepted their loan terms and received their funds, can still change their mind and withdraw their loan application within 7 working days of the loan disbursal date, without penalty.

Borrowers who withdraw must return all funds including any interest accrued.

Please see your loan disclosure document for details.

You can also withdraw your loan before you have received your funds at any time via your dashboard.


This is another word for return on investment.