# How is interest calculated on P2P lending?

I invested 102€ on a P2P site on a business loan. Here are the details of the loan:

• Issue date: 18.01.2020 (DD//MM/YYYY date format)
• Maturity date: 18.03.2020
• Interest rate: 13% annually.

I bought in on 29.01.2020. The total interest I got from the loan was 1.78€.

How I thought it was calculated: In my case: 102x13/(100*4) = 3.315€

What is the actual formula for calculating P2P lending interest?

• It depends on the term of the loan. How often does it compound? Are payments made periodically or only at the end of the loan? Mar 20, 2020 at 13:19
• @DStanley hi, payments are made periodically. I got 0.73€ on 18.02, and 1.05€ on 19.03. I got the principal back on 19.03.
– Snow
Mar 20, 2020 at 13:23
• I am confused. You mention 18.01.2020 to 18.03.2020 or two months. Then you include 4 months in your formula, but in your example calculate you use 3 months. Mar 20, 2020 at 13:24
• @mhoran_psprep sorry I had to add the division sign to the formula.
– Snow
Mar 20, 2020 at 13:26
• @mhoran_psprep I just simplified the franction. 3/12 = 1/4. Should I change it to 3/12?
– Snow
Mar 20, 2020 at 13:28