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Why don’t you calculate the recovery rate on the principal balance?

The right to demand immediate payment of the principal balance is stipulated in the agreements to make enforcing the contract economic. The cost of collection and recovery would be excessive if enforcement steps would need to be taken for each missed payment. This clause makes it possible to substantially reduce the number of steps necessary to enforce the contract and get the borrower to start making payments under the agreed schedule.

The right to demand immediate payment of the principal balance does not mean it’s reasonable to expect this to happen. Consumers take out loans to pay for larger purchases in affordable monthly payments. Loans would not be required nor interest paid on them if people would have the capital available themselves. Borrowers who are having financial difficulties are even less likely to have this sort of capital available. Therefore, the main objective of collection and recovery is to restore the cash flow, or part of it. The success of these activities are measured by looking at how much of the cash flow was restored.

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* Capital at risk. Investments made with Bondora are not guaranteed, nor is the preservation of value invested guaranteed. Please note that the yield achieved in past periods does not guarantee the rate of return in future periods. The yield of the Go & Grow Unlimited tier is up to 4% p.a. The yield for Go & Grow is up to 6.75% p.a. Before deciding to invest, please review our risk statement and consult with a financial advisor if necessary.