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How are interest rates assigned to loans?

Last Updated: Nov 03, 2017 09:35AM EDT
When a borrower submits a loan application, the application is reviewed and graded on a scale ranging from Grade A to Grade G and assigned a corresponding interest rate. Grade A loans are the least risky and not as rewarding as Grade G loans which are the most risky and consequently the most rewarding. Grade A loans generally offer returns of 5.5% and Grade G loans generally offer returns of 26% with each letter grade offering a return in that in range. The grade and interest rate will not be adjusted during the life of the loan. 

Currently, our grading scale and corresponding rates are as follows.

Grade A: 5.5% | Grade B: 9.2% | Grade C: 13% | Grade D: 15.6% | Grade E: 19% | Grade F: 23.4% | Grade G: 25.8%

We use a number of factors when grading a loan and assigning a rate. Those factors include: location, lien position, borrower commitment, skin-in-the-game, and others. The final rate is adjusted from the above scale around factors like loan size, loan term, personal guarantee, history with Groundfloor, credit worthiness, and more.

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