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I didn't understand this section, why would they pay $73 for $75 and where do the $25 come from? "Investor Economics: Assume a $100 BNPL loan. $25 is paid upfr
by janosch_123 1y ago
I didn't understand this section, why would they pay $73 for $75 and where do the $25 come from?
"Investor Economics: Assume a $100 BNPL loan. $25 is paid upfront by the Consumer, so an Investor pays $73 for a $75 loan, discounted for risk, fees, and return expectations. The Investor receives $75 from customer repayments over 6 weeks minus servicing fees of $0.25. A $1.75 profit on $73 investment over 6 weeks is a 2.4% return, or 22.8% annualized (52 weeks/6 weeks = 8.67 periods each year; annualized return = (1+0.024)8.67 - 1)."
- dustincoates 1y agoFor why the investor pays $73, it's right there in your quote: > an Investor pays $73 for a $75 loan, discounted for risk, fees, and return expectations The investor doesn't expect to get 100% of that $75 back on average. The $25 is the first payment, which is made immediately.
- janosch_123 1y agoOh of course the investor buys $75 of debt for $73, I get it now. I somehow had it in my head the other way around that he can borrow $75 for $73 which wouldn't make sense. Thank you.