P2P Lending Calculator
P2P lending net yield.
Calculate P2P lending net returns after defaults and platform fees — what a gross headline interest rate actually leaves in your account.
What this tool does
This calculator models the net return from peer-to-peer lending after accounting for defaults and platform fees. It takes your investment amount, the gross interest rate offered, the annual default rate, the annual platform fee, and your investment period to estimate what you'll actually earn in real terms. The result shows projected future value based on compounding the net rate year on year. The calculation reveals how significantly defaults and fees reduce the headline interest rate—often substantially. This tool is useful for comparing different P2P platforms or assessing whether net returns align with your financial goals. The estimate assumes consistent default rates and fees throughout the period and does not account for reinvestment timing, tax treatment, or changes to platform terms. Results are for illustration only.
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Formula Used
Spotted something off?
Calculations or display — let us know.
Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
P2P (peer-to-peer) lending: lend money to individuals or businesses through platforms like Funding Circle, RateSetter, Zopa (now closed). Receive interest payments minus defaults and platform fees. Headline rates 5-10% gross, but defaults and fees typically reduce to 3-6% net returns.
Example: 10,000 lent at 8% gross interest, 2% expected defaults, 1% platform fee = 5% net annual return. Over 5 years: 12,762. 2,762 net gain on 10,000. Compare to S&P 500 at 7%: 14,026. P2P offers steady income but typically underperforms diversified equities long-term.
P2P risks: not FSCS protected (no government bailout if platform fails). Liquidity limited (some platforms offer 'instant access' with secondary market discounts). Borrower defaults rise during recessions (Funding Circle losses 2020). Tax: interest counts as savings income (1,000 personal savings allowance). Innovative Finance tax-advantaged account wraps P2P tax-free up to tax-advantaged account limit. Overall: small allocation (5-10%) acceptable for income-focused investors, not core portfolio.
A worked example
Try 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
Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. The number represents one scenario rather than a forecast.
££10,000 at 8% gross, 2% defaults, 1% fees over 5y = 5.00%.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
This calculator computes the future value of a peer-to-peer lending investment using compound growth. It calculates a net annual rate by subtracting the annual default rate and platform fee from the gross interest rate. The resulting net rate is then applied as a compound growth factor over the specified investment period. The model assumes the net rate remains constant throughout the holding period, defaults occur uniformly across the portfolio, and no additional capital is added or withdrawn. It does not account for reinvestment timing, tax implications, actual default clustering or recovery rates, platform liquidity constraints, or variations in individual loan performance. Results represent a simplified projection based on the stated inputs.
References
Frequently Asked Questions
Best P2P platforms?
Diversification within P2P?
Tax efficiency?
P2P vs corporate bonds?
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