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Why do my monthly repayments from a borrower vary?

 

Each month you receive a principal payment and an interest payment from the borrower, which can be seen on your statements.

Principal is the money that is still lent out to the borrower on the loan part. Each month the borrower repays a portion of the principal outstanding on the loan part, and pays you interest on top. The sum of these two payments is typically equal each month, meaning each month you get paid a set amount by each borrower. The total amount you receive each month may be marginally different due to the rounding of repayments. This occurs because we round down interest and principal repayments to the nearest penny until a full penny has been accumulated at which point it is paid out to the investor.

All repayment schedules at Funding Circle are calculated up-front when the borrower accepts a loan. For example if an investor were to lend £920 to a borrower, on a one year loan, at a rate of 4.7% per year the principal and interest payments due would be the same as those below.

There is a 1% annual servicing fee for loan parts, which is included in the interest rate charged on the loan and taken directly from the loan repayments made by borrowers. This is based on the principal amount outstanding on the loan and covers the costs of running the website and maintaining the loans. This is also calculated up-front and has been included in the example below.

Since each month some of your principal is repaid you will need to continue re-lending out your repayments to continue earning interest on the re-paid principal. If you are using Autobid, it will automatically re-lend any repayments you receive on loan requests that match your criteria. 
 

Repayment Example: £920 loan part earning 4.7% interest on a 1 year loan 
 

Period

Principal payment (£)

Interest payment (£)

Total payment(£)

Servicing fee (£)

Principal left (BoP) (£)

Principal left (EoP) (£)

Annual interest (%)

1

75.02

3.60

78.62

0.77

920.00

844.98

4.7%

2

75.33

3.31

78.64

0.71

844.98

769.65

4.7%

3

75.62

3.01

78.63

0.64

769.65

694.03

4.7%

4

75.91

2.72

78.63

0.58

694.03

618.12

4.7%

5

76.21

2.42

78.63

0.51

618.12

541.91

4.7%

6

76.51

2.12

78.63

0.45

541.91

465.40

4.7%

7

76.81

1.83

78.64

0.39

465.40

388.59

4.7%

8

77.11

1.52

78.63

0.32

388.59

311.48

4.7%

9

77.41

1.22

78.63

0.26

311.48

234.07

4.7%

10

77.72

0.92

78.64

0.20

234.07

156.35

4.7%

11

78.02

0.61

78.63

0.13

156.35

78.33

4.7%

12

78.33

0.30

78.63

0.06

78.33

0.00

4.7%

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