How is interest calculated on P2P lending?

Question

I invested 102€ on a P2P site on a business loan. Here are the details of the loan:

I bought in on 29.01.2020. The total interest I got from the loan was 1.78€.

How I thought it was calculated:

In my case: 102x13/(100*4) = 3.315€

What is the actual formula for calculating P2P lending interest?

It depends on the term of the loan. How often does it compound? Are payments made periodically or only at the end of the loan? — D Stanley, Commented Mar 20, 2020 at 13:19
@DStanley hi, payments are made periodically. I got 0.73€ on 18.02, and 1.05€ on 19.03. I got the principal back on 19.03. — Snow, Commented Mar 20, 2020 at 13:23
I am confused. You mention 18.01.2020 to 18.03.2020 or two months. Then you include 4 months in your formula, but in your example calculate you use 3 months. — mhoran_psprep, Commented Mar 20, 2020 at 13:24
@mhoran_psprep sorry I had to add the division sign to the formula. — Snow, Commented Mar 20, 2020 at 13:26
@mhoran_psprep I just simplified the franction. 3/12 = 1/4. Should I change it to 3/12? — Snow, Commented Mar 20, 2020 at 13:28

mhoran_psprep · Accepted Answer · 2020-03-20 13:32:06Z

2

Based on the dates in your example.

13% of 102 is 13.26 or 1.105 per month. So if you had been invested for the whole two months that would be 2.21 in interest

Turning the monthly rate into a daily rate and then looking at the 48 days between January 29th and March 18th means that you would be due 1.78.

answered Mar 20, 2020 at 13:32

mhoran_psprep

143k15 gold badges197 silver badges399 bronze badges

Aha so they don't pay me for the whole term period. They only pay me the interest from when I start the investment. Thanks!
– Snow
Commented Mar 20, 2020 at 13:39

Add a comment |

1 Answer 1