The Loss Rate is calculated in Interest Radar based on the current status of the loan and the expected default rate for that particular status. Performing loans have 0% Loss Rate for the purpose of this indicator, regardless of its grade.

When the Loss Rate is used in the context of a group of loans (that meet a certain criteria or that are part of a portfolio), the calculation is the weighted average Loss Rate for all loans in that group. For the specific case of the Loss Rate shown in the analysis page, the average is not weighted, as the recommendation is that you will not fund a loan as a proportion of its total principal, but, for the sake of diversification, a fixed amount (normally $25) for all loans.

The following expected default rates are used when calculating the Loss Rate:

- Fully Paid: 0%
- Current: 0%
- Performing Payment Plan: 35%
- In Grace Period: 16%
- Late (16-30 days): 23%
- Late (31-120 days): 47%
- Default: 100%
- Charged Off: 100%

The expected default rate is calculated on the remaining principal balance, not the entire loan amount. For example:

- The loan term is 36 months. Before the first payment ever, the debtor enters the grace period. The Loss Rate for that loan will be 100% principal x 16% expected default rate = 16%
- The loan term is 36 months. After paying 35 installments, the debtor enters the grace period. The Loss Rate for that loan will be 3.697% unpaid principal x 16% expected default rate = 0.59%

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