My ROI is a very simple formula, that does not measure to any accounting standard, but is fast to calculate and can be used to compare to other ROI within Interest Radar only. What I mean is, if you do two strategies in IR and the first has a better ROI then the second, if means the first will yield you more return than the second. It's not meant to be compared to anything outside IR, like a CD or stocks or LC's ROI or any indicator in another site.

The ROI is simply the Interest Rate minus the Loss Rate that I define here: http://interestradar.wordpress.com/2012/08/30/definition-loss-rate/

So for example, the Loss Rate for a "In Grace Period" loan will be RemainingPrincipal / TotalAmountFunded * 16%

First, if I understand correctly, for a single loan you calculate the ROI as:

ROI = InterestRate - Loss

where Loss=LossRate * RemainingPrincipal / TotalAmountFunded

and, for example, the LossRate = 0 for a current loan and 1 for a defaulted loan (extreme cases)

For all loans, that match the filter criteria, your Analysis screen shows:

Interest (or Av. Interest; %) = The average of the interest rate of all matching loans

Loss (or Av. Loss; %) = The average of the Loss of all matching loans

For the ROI, we can use either:

A. ROI=The average of the ROI of all matching loans

or

B. ROI= Av. Interest - Av. Loss

(it should give same results)

I tried the calculations on a simple example using the Downloaded Statistics from LC and Interest Radars Analysis screen using the following Filters:

Credit Grade = G (all subgrades)

Loan Length = 36 months

Loan Purpose = Other

Inquiries = 1

Interest Radar gave me 3 loans (1 loan with a loss) with:

Av. Interest = 21.2%

Av. Loss=6.0%

Av. ROI= 15.1%

Note that Av. Interest - Av. Loss = 15.2% which is approximately the same as Av. ROI=15.1% (maybe rounding error?)

When using the LC csv file, I have two choices when selecting the "Amount Funded" as well as any "Remaining Principal" (for Charged Off loans).

In the LC file I have:

Amount Funded By Investors (col C)

Total Amount Funded (col O)

Remaining Principal Funded by Investors (col Q)

Remaining Principal (col S)

**What is the difference between "Amount Funded By Investors" and "Total Amount Funded" ? **

If not funded by investors, does LC contribute with the difference...? I calculated the ROI using both alternatives, where

Alt 1: Loss= LossRate*Remaining Principal Funded by Investors/Amount Funded By Investors

Alt 2: Loss= LossRate*Remaining Principal/Total Amount

The filtered LC cvs file gave me 3 loans with 2 current loans and 1 charged of loan;

**Alt 1:**LoanID InterestRate Calculated Loss Calculated ROI (=InterestRate - Loss)

362421 19.04% 23.79% -4.75%

579815 20.16% 0.00% 20.16%

1208692 24.33% 0.00% 24.33%

Averages: 21.18% 7.93% 13.25%

(Alternatively, note that ROI = 21.18%-7.93% = 13.25% as well)

**Alt 2:**LoanID InterestRate Calculated Loss Calculated ROI (=InterestRate - Loss)

362421 19.04% 18.09% 0.95%

579815 20.16% 0.00% 20.16%

1208692 24.33% 0.00% 24.33%

Averages: 21.18% 6.03% 15.15%

(Alternatively, note that ROI = 21.18%-6.03% = 15.15% as well)

Alternative 2 matches your results, so that is obviously how you calculate it (using Total Amount rather than Amount Funded by Investors).