Lenders RAR calculation FAQs

RAR calculation FAQs

What was the issue with my previous RAR calculation?

In updating our data warehouse we have identified that the amount of charged-off principal has been inconsistent between the borrower account and the corresponding investor reporting .

Charged-off principal is a deduction in the return portion of the RAR calculation. If your charged-off principal was being overstated your RAR may have decreased. If your charged-off principal was being understated your RAR may have increased.

What will be the impact on my account?

There is no cash impact to lenders however in some cases the charged-off principal has been over- or under-stated on the investor dashboard. Some lenders may see a change on their RAR, Charged-off Principal and Outstanding Principal fields.

When will be the RAR and other numbers update on my dashboard?

The RAR figures have now been updated on your dashboard.

What is RAR (Realised Annual Return)?

Can you show me an example of how the RAR is calculated?

RAR = ( ( i + p - d + r - f - w - s) x 365 / t) / p

yt1:tn = ( ∑ (it + pt - dt +rt -ft -wt - st) x 365) / ∑pt

RAR = Realised Annual Return
i = interest amount received
p = payment protect borrower fee
d = funded principal defaulted (written off)
r = funded principal defaulted recovered
f = Service/Lender fees
w = payment protect waived principal
s = net payment protect management / sales commission
t = days principal funded was invested
p = principal funded