After updating the return method to IRR, the return for some of my loans has increased, why?

On 01.06.2024, we carried out a recalculation of the annual return for all the loans that are mediated via FundingPartner. The annual return for all paid-off loans is now stated as the internal rate of return (IRR). This means that certain loans have received a lower or higher return than previously listed.

Reasons why certain loans are now shown with a higher annual return than previously reported may be:

• Change of calculation method: In the past, other methods were used to calculate the annual return. The transition to IRR provides a more precise and standardized annual return, which in some cases may be higher than previously reported.
• 360 days in a year: In the new calculations, we now use 360 ​​days in a year as standard, in line with common practice in the industry, from the previous 365 days. This may have adjusted the return upwards for some loans, which is more correct as the borrowers pay based on the 360 ​​day system.
• Reinvestment of interest and partial repayments: The IRR method assumes that interest payments and partial repayments are continuously reinvested, which gives a higher annual return compared to previous methods used.
• Manual errors: In the past, the return has been calculated manually and errors have been discovered in some calculations. With the transition to IRR, a standardized and automatic method for calculating returns has been established. The return figures will thus be more precise than before.