Using the tool lenders can create a test portfolio and specify the amount they would like to invest, along with the duration, interest rates, and tenure. The Portfolio Simulator will then perform advanced algorithm-based calculations based on the input, generating projected portfolio returns by following a standardized method using the concept of Net Annualized Return (NAR).
A graph displays NAR variations over the tenure of the portfolio. Other results such as principal recovered, income or interest earned, principal and potential income lost are also displayed graphically. The tool also allows lenders to change the ‘As of Date’ for the portfolio to view estimated returns on the stipulated date.
“The key to a truly successful online P2P lending platform lies in simplifying the technology and process for lenders, considering how the concept is still at a nascent stage in India. Most recurring questions from registered lenders on the platform are about how investing at different times, re-investing the returns or investing at different rates and tenure have an impact on their overall portfolio,” said Shakti Goel, Chief Product and Technology Officer, Faircent.com.
“This virtual tool will not only help existing lenders but also prospective lenders find out what kind of returns they can earn by investing in P2P lending. By simulating various loan scenarios though this virtual tool, prospective lenders can view a detailed summary of earnings from multi-loan portfolios and take the most informed lending decisions.”
The website provides a virtual marketplace for borrowers and lenders to interact directly, without having to go through traditional financial intermediaries like banks. The company lets lenders invest from INR 750 ($12 approx.) onwards on the platform for a loan period ranging from 3–36 months and choose the borrower according to the loan period that suits them.
Faircent claims that its goal is to omit the high margins which banks and financial institutions charge on transactions, Faircent.com extends the benefits of reduced costs to borrowers in the form of lower interest rates and processing fees while lenders earn higher margins and returns on their investments.
