See whether your installment loan makes money
Enter your loan, default rate or vintage curve, and costs. See interest and fee income, loss to sales, every cost and the profit of one loan over its life.
Loan profit
The money lent on one loan and the cost of getting it are back by month 22, and 1,000 loans like it earn €337,964 over their life.
Income and costs
Cumulative cash per loan
Installment schedule
| Month | Scheduled | Per loan | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Installment | Principal | Interest | Balance after | Still paying | Principal received | Interest received | Principal lost | Interest lost | |
| 1 | 151.23 | 103.73 | 47.50 | 2,896.27 | 99.5% | 103.22 | 47.27 | 11.02 | 0.23 |
| 2 | 151.23 | 105.37 | 45.86 | 2,790.91 | 99.0% | 104.36 | 45.42 | 10.18 | 0.44 |
| 3 | 151.23 | 107.04 | 44.19 | 2,683.87 | 98.6% | 105.53 | 43.57 | 9.38 | 0.62 |
| 4 | 151.23 | 108.73 | 42.49 | 2,575.14 | 98.2% | 106.74 | 41.72 | 8.60 | 0.78 |
| 5 | 151.23 | 110.45 | 40.77 | 2,464.69 | 97.8% | 107.98 | 39.86 | 7.85 | 0.91 |
| 6 | 151.23 | 112.20 | 39.02 | 2,352.48 | 97.4% | 109.26 | 38.00 | 7.12 | 1.02 |
| 7 | 151.23 | 113.98 | 37.25 | 2,238.51 | 97.0% | 110.57 | 36.13 | 6.43 | 1.11 |
| 8 | 151.23 | 115.78 | 35.44 | 2,122.72 | 96.7% | 111.92 | 34.26 | 5.77 | 1.18 |
| 9 | 151.23 | 117.62 | 33.61 | 2,005.11 | 96.3% | 113.32 | 32.38 | 5.14 | 1.23 |
| 10 | 151.23 | 119.48 | 31.75 | 1,885.63 | 96.0% | 114.75 | 30.49 | 4.54 | 1.26 |
| 11 | 151.23 | 121.37 | 29.86 | 1,764.26 | 95.8% | 116.22 | 28.59 | 3.98 | 1.27 |
| 12 | 151.23 | 123.29 | 27.93 | 1,640.97 | 95.5% | 117.74 | 26.68 | 3.45 | 1.26 |
| 13 | 151.23 | 125.24 | 25.98 | 1,515.72 | 95.3% | 119.31 | 24.75 | 2.95 | 1.23 |
| 14 | 151.23 | 127.23 | 24.00 | 1,388.50 | 95.0% | 120.92 | 22.81 | 2.49 | 1.19 |
| 15 | 151.23 | 129.24 | 21.98 | 1,259.25 | 94.8% | 122.58 | 20.85 | 2.06 | 1.13 |
| 16 | 151.23 | 131.29 | 19.94 | 1,127.97 | 94.7% | 124.29 | 18.87 | 1.67 | 1.06 |
| 17 | 151.23 | 133.37 | 17.86 | 994.60 | 94.5% | 126.05 | 16.88 | 1.32 | 0.98 |
| 18 | 151.23 | 135.48 | 15.75 | 859.12 | 94.4% | 127.86 | 14.86 | 1.01 | 0.89 |
| 19 | 151.23 | 137.62 | 13.60 | 721.50 | 94.3% | 129.72 | 12.82 | 0.74 | 0.78 |
| 20 | 151.23 | 139.80 | 11.42 | 581.70 | 94.2% | 131.65 | 10.76 | 0.51 | 0.67 |
| 21 | 151.23 | 142.02 | 9.21 | 439.68 | 94.1% | 133.63 | 8.67 | 0.32 | 0.54 |
| 22 | 151.23 | 144.26 | 6.96 | 295.42 | 94.0% | 135.67 | 6.55 | 0.17 | 0.41 |
| 23 | 151.23 | 146.55 | 4.68 | 148.87 | 94.0% | 137.77 | 4.40 | 0.07 | 0.28 |
| 24 | 151.23 | 148.87 | 2.36 | 0.00 | 94.0% | 139.94 | 2.22 | 0.01 | 0.14 |
| Total | 3,629.42 | 3,000.00 | 629.42 | 2,870.97 | 608.80 | 96.77 | 20.63 | ||
Get the result by email
The break-even default rate is the line your credit policy has to keep the product under. Set that policy and test it on past applications. Start free
Show the formulas
Interest = Σ Balance outstanding × Interest rate ÷ 12 × Loans still paying Fees = Loan amount × Upfront fee + Σ Monthly fee × Loans still paying Credit loss = Σ Loans defaulting × Balance outstanding × Loss given default Cost of funds = Σ Loans still paying × Balance outstanding × Cost of funds ÷ 12 Servicing = Σ Servicing cost × Loans still paying Collections = Collection cost × Lifetime default rate Acquisition and data = Acquisition cost + Data and decision cost ÷ Approval rate Net = Interest + Fees − Credit loss − Cost of funds − Servicing − Collections − Acquisition and data Loss to sales = Credit loss ÷ Loan amount
These figures leave out early repayment, taxes, capital and provisions. A defaulted loan is written off when it defaults, and recoveries are included in the loss given default.
Installment loan profitability
Loan profitability is the net profit of one installment loan over its life. It includes interest and fee income, credit loss, cost of funds and the other costs of making and servicing the loan.
The result shows whether the product earns enough to cover its losses and costs. Use the break-even default rate and payback month to review the product and set its credit policy.
Loan profit questions
What does loss to sales mean?
Loss to sales is credit loss divided by the amount lent. The calculator works it out month by month from loans defaulting, the balance outstanding and loss given default.
How do you calculate installment loan profitability?
Start with interest and fee income over the loan's term. Subtract credit loss and the costs of funding, servicing, collections and acquiring the loan to get net profit per loan.
What does break-even default rate mean?
The break-even default rate is the lifetime default rate at which net profit reaches zero. The calculator applies the selected default curve shape to find that rate.
How do repayment types change loan profit?
With equal installments, the payment stays level as interest falls and principal rises. With equal principal, principal repayment stays level, so the balance changes differently over the term and affects interest income and credit loss.
How do cost of funds and acquisition cost affect loan profit?
Cost of funds is charged each month against the balance on loans still paying. Acquisition cost includes the cost per loan and data and decision cost per application divided by approval rate, so both reduce net profit per loan.