Peer-to-Peer Expected Return CalculatorFree online financial calculator — instant results, no sign-up
Estimate one-year net return after defaults, recoveries and platform fees.
Estimates only, based on the inputs and assumptions shown. This is not financial, investment, tax, or legal advice. Prices, rates and local rules may change; crypto scenarios do not predict returns. Confirm important decisions with a qualified professional.
Sign in to save results and favorites.
About the Peer-to-Peer Expected Return Calculator
The Peer-to-Peer Expected Return Calculator estimates one-year net income and return from peer-to-peer lending after principal defaults, recoveries, and platform fees. It applies interest only to performing principal, subtracts unrecovered defaulted principal, and charges an annual fee on the initial investment. With the default inputs, expected net income is $540.00 and expected net return is 5.4%.
- Invested principal ($)
- The initial amount invested in peer-to-peer loans, in dollars, defaults to $10000.
- Interest on performing principal (%)
- The one-year interest rate applied only to principal that does not default, expressed as a percentage, defaults to 10%.
- Principal default share (%)
- The share of initial principal assumed to default during the year, expressed as a percentage, defaults to 4%.
- Recovery on defaulted principal (%)
- The portion of defaulted principal assumed to be recovered for this one-year estimate, expressed as a percentage, defaults to 20%.
- Annual fee on initial principal (%)
- The annual platform fee charged against the initial invested principal, expressed as a percentage, defaults to 1%.
Formula and method
Convert percentage inputs to decimals: i = I/100, d = D/100, r = R/100, f = F/100. Expected net income: N = P(1 − d)i − Pd(1 − r) − Pf. Expected net return: Y = (N/P) × 100%, for P > 0. With the defaults: N = 10000(1 − 0.04)(0.10) − 10000(0.04)(1 − 0.20) − 10000(0.01) = $540.00; Y = (540/10000) × 100% = 5.4%.
- PInitial invested principal in dollars.
- I, iInterest on performing principal as an entered percentage and its decimal equivalent.
- D, dPrincipal default share as an entered percentage and its decimal equivalent.
- R, rRecovery on defaulted principal as an entered percentage and its decimal equivalent.
- F, fAnnual fee on initial principal as an entered percentage and its decimal equivalent.
- NExpected one-year net income in dollars after interest, unrecovered principal losses, and fees.
- YExpected one-year net return as a percentage of initial invested principal.
First, convert the percentage inputs to decimals. Of the $10000 initial principal, a 4% default share leaves $9600 performing and $400 defaulted. Applying 10% interest to the performing principal produces $960 in interest. Recovering 20% of the $400 defaulted principal returns $80, leaving a $320 principal loss. The 1% fee on initial principal is $100. Subtracting the $320 loss and $100 fee from $960 interest gives $540.00 expected net income; dividing by $10000 gives a 5.4% expected net return.
Worked example
These are the calculator's starting values and the results it actually produces for them.
Inputs
- Invested principal10000 $
- Interest on performing principal10 %
- Principal default share4 %
- Recovery on defaulted principal20 %
- Annual fee on initial principal1 %
Results
- Expected net income$540.00
- Expected net return5.4%
How to use the Peer-to-Peer Expected Return Calculator
- 1Enter your initial invested principal in dollars; the default is $10000.
- 2Enter the one-year interest rate on performing principal; the default is 10%.
- 3Enter the principal default share and recovery rate on defaulted principal; the defaults are 4% and 20%, respectively.
- 4Enter the annual platform fee as a percentage of initial principal; the default is 1%.
- 5Review expected net income and expected net return, then adjust the default and recovery assumptions to assess how sensitive the estimate is to credit losses.
Reading your result
Expected net income is the estimated dollar gain or loss after interest, unrecovered defaulted principal, and platform fees; it is not the total principal returned or a cash distribution forecast. The default result of $540.00 means the modeled gains exceed losses and fees by that amount. Expected net return expresses the same net income relative to the initial investment: 5.4% for the default inputs. A negative result means modeled principal losses and fees exceed interest income.
Limitations
This is a simplified one-year scenario estimate, not a guaranteed return or a probability-weighted forecast generated from loan data. It assumes performing principal earns the full entered interest rate, defaulted principal earns no interest, and the entered recovery is credited within the modeled year. It does not model default timing, amortization, delayed recoveries, reinvestment, compounding, idle cash, taxes, inflation, or fees beyond the entered annual charge on initial principal. Actual platform fee structures and recovery costs may differ. Default and recovery shares should be between 0% and 100%, and percentage return requires positive invested principal.
Common questions
Why does a 10% interest rate produce only a 5.4% expected net return with the defaults?+
Interest is earned only on the $9600 performing principal, producing $960. The calculator then subtracts $320 of unrecovered principal losses and the $100 annual platform fee, leaving $540.00, or 5.4% of the $10000 investment.
Is the 20% recovery rate applied to the whole investment?+
No. It applies only to the $400 of principal assumed to default. The resulting $80 recovery reduces the default loss to $320; it is returned principal, not additional interest income.
Does the platform fee decrease when some principal defaults?+
Not in this model. The 1% annual fee is applied to the initial $10000 principal, so the fee remains $100 regardless of the default or recovery share.
Should I enter the percentage of loans that default as the principal default share?+
Only if that percentage also represents the share of invested principal that defaults. This calculator measures defaults by dollar exposure, not loan count; larger defaulted loans can cause a higher principal default share than the share of loans defaulting.
Does the calculator save my information?+
Calculations run in your browser. While signed in, inputs and results are automatically recorded in account history; saving a result creates a separate saved record.
You might also like
Interest Calculator
Growth of savings with compound interest and regular deposits.
Investment Calculator
Project an investment with monthly contributions.
Finance Calculator
Solve for future value from present value, rate, periods and payment.
Compound Interest Calculator
Compare compounding frequencies and see the effective rate.
Interest Rate Calculator
Find the rate on a loan from amount, payment and term.
Savings Calculator
How savings grow with deposits, interest and tax.
Results are estimates for informational purposes and are not financial, medical or legal advice.