P2P Lending Calculator

P2P (peer-to-peer) lending means lending money to individuals or businesses through online platforms in exchange for interest payments, minus any defaults and platform fees. Headline rates commonly sit around 5-10% gross, but defaults and fees typically reduce this to roughly 3-6% net.

Example: 10,000 lent at 8% gross interest, 2% expected defaults, and 1% platform fee gives a 5% net annual return. Over 5 years that compounds to about 12,762, a 2,762 net gain on 10,000. For comparison, the same 10,000 growing at an assumed 7% annual return would reach about 14,026. P2P tends to provide steadier income, while diversified equity indices have historically shown higher long-run average returns alongside greater short-term volatility.

P2P risks include no deposit-protection cover, so there is no government backstop if a platform fails. Liquidity is limited, though some platforms offer earlier access via a secondary market at a discount. Borrower defaults tend to rise during recessions, as platform losses did in the 2020 downturn. P2P interest is generally treated as savings or investment income; tax treatment, allowances, and any tax-advantaged wrappers vary by country, so the after-tax return depends on local rules and the marginal rate that applies. P2P is often used as an income-oriented holding rather than a core growth allocation, with position sizing varying by individual circumstances.

A worked example

With the defaults: investment amount of 10,000, gross interest rate of 8%, annual default rate of 2%, annual platform fee of 1%. The tool returns 5.00%. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to Investment Amount, Gross Interest Rate %, Annual Default Rate %, Annual Platform Fee %, and Investment Period. Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.

The formula behind this

Net rate = gross - defaults - fees. Future value at compound net rate. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.

Using this well

What this doesn't capture

This is a simplified model that holds its assumptions constant. Real outcomes vary with market conditions, costs, taxes, and timing, so the figure is best read as one scenario rather than a forecast.