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Term Loan Economics Model

Build-your-own fixed-term loan portfolio model — per-loan IRR, charge-offs, cost of funds, and net interest margin for installment lending.

Make your own copy: open in Google Sheets → File → Make a copy.

How to use it

Lender-side economics for a fixed-term consumer loan portfolio (e.g. installment loans, personal loans, point-of-sale lending). The model has a loan-level sheet and a portfolio sheet that aggregates a monthly originations vintage forward in time — so you can see both the per-loan IRR and the portfolio-level revenue ramp, charge-off curve, and net contribution margin.

Key inputs to set:

  • Average loan size — typical principal balance at origination
  • Term — months until full repayment (12, 24, 36, 48, or 60)
  • APR — your lending rate
  • Origination fee — % of principal taken upfront
  • CAC — fully-loaded customer acquisition cost per funded loan
  • Annual charge-off rate — expected losses as % of outstanding balance per year
  • Cost of funds — your warehouse or debt facility rate
  • Servicing cost per loan per month — allocated cost of payments, collections, customer support
  • Originations per month — drives the portfolio-level revenue and loss timing

The output gives per-loan IRR, per-loan net profit, and a portfolio-level monthly P&L stack showing revenue, charge-offs, cost of funds, and net contribution margin over time. The breakeven analysis surfaces the annual charge-off rate at which a loan flips from profitable to negative.

Modeling assumptions

  • Charge-offs are smoothed across the life of the loan. Real-world vintages typically take 6-24 months for losses to peak — this is an annualized approximation
  • No prepayment modeling. Loans assumed to run full term, which overstates the duration of received cash flows for high-prepayment products
  • CAC is treated as a one-time origination cost, not amortized across the life of the loan
  • Capital deployment uses a simple revolver assumption; doesn’t model the dynamics of a real warehouse line (advance rates, concentration limits, eligibility criteria)
  • All figures are nominal. For NPV/IRR analysis across loans of different terms, you’d need to discount cash flows separately