1. Charge-Off Rate by Vintage
What it is:
The percentage of
loans from a specific origination period that you never collect.
Why it matters:
This is how you find out whether your underwriting is getting better or worse.
Not
your gut. Not your loan officer’s opinion. Not the excuse of the month.
The math.
Looking at one big portfolio-level charge-off number hides too much. Vintage analysis forces you to compare one cohort against
another.
That is how you catch a bad month, a bad policy change, a bad channel, or a bad approval trend before it becomes a year-long leak.
How to calculate
it:
Loans charged off from a cohort ÷ Total loans originated in that cohort × 100
Example:
You funded 200 loans in January. By June, 28 charged off.
That gives you a 14% charge-off rate for the January vintage.
Now imagine your February vintage hits 22% over the same time window.
That is not noise. That is a warning.
Something changed.
Maybe it was underwriting.
Maybe it was lead quality.
Maybe it was
pricing.
Maybe it was collections follow-up.
But something broke, and vintage tracking tells you where to start looking.
2. Roll Rate by Loan Type
What it is:
The
percentage of delinquent loans that move from one past-due bucket to the next.
Why it matters:
Roll rate tells you where future charge-offs are being born.
If too
many loans move from 30 days past due to 60 days past due, your problems are already forming.
If too many, then move from 60 to 90; the funeral is already being scheduled.
This is one of the clearest
early-warning metrics in subprime lending.
It can tell you whether collections are slipping, whether borrower quality is deteriorating, or whether one product is behaving worse than another.
It also forces you
to stop treating all delinquency as one blob.
A payday product does not behave like an installment product.
A storefront borrower does not always behave like an online borrower.
That is one reason channel and model matter so much in this business.
If you want a broader look at that issue, read Online vs. Storefront Lending in 2026: Where Profits and Pitfalls Hide.
How to calculate it:
Loans that moved from one delinquency
bucket to the next ÷ Total loans in the earlier bucket × 100
Example:
50 loans are 30 days past due.
Next month, 35 of them are now 60 days past due.
Your 30 to 60 roll rate is 70%.
That is a red flag.
A high and rising roll rate means your collections process is not catching problems early enough.
And the longer you wait to fix it, the fewer good options you have left.
3. Cost Per Funded Loan
What it
is:
Your total operating expenses divided by the number of loans funded in the same period.
Why it matters:
This tells you the minimum economics required to make a loan worth writing.
If you do not know your cost per funded loan, you are pricing blind.
A lot of lenders focus on approvals, applications, or funded volume.
Those numbers can look great while
the unit economics are garbage.
You can be winning the activity game and losing the business.
This metric forces discipline.
It makes you ask the right questions:
Are we overstaffed for our volume?
Are our marketing costs too high?
Are our branches or channels carrying their own weight?
Are we writing loans too small to cover the real cost of acquisition and servicing?
How to calculate it:
Total operating expenses ÷ Number of loans funded
Example:
Monthly expenses are $28,000.
You funded 180 loans.
Your cost per funded loan is $155.
If your average loan is $400, and your economics only produce $120 per loan before defaults, you are upside down before you count a single charge-off.
That is not a collections problem.
That is a business model problem.
It is also why some lenders lose more money to caution than default.
They cut growth in the wrong places, tolerate dead costs too long, or keep writing loans
that never had enough room in them to work in the first place.
For more on that, read Subprime Lenders Lose More Money to Caution
Than They Ever Lose to Default.
4. Net Yield After Defaults
What it is:
Your actual return on the loan portfolio after charge-offs, cost of funds, and operating costs.
Why it
matters:
This is the scoreboard.
Everything else feeds into this.
You can have strong originations, stable delinquency, and decent collections notes in the system.
None of it matters if the portfolio is not producing a real return after losses and overhead.
This is the number that tells you whether you have a business or a habit.
How to calculate it:
(Fee and interest income − Charge-offs − Cost of funds − Operating costs) ÷ Average outstanding portfolio balance × 100
Example:
You collect $45,000 in fees and interest.
Charge-offs cost $8,000.
Cost of funds is $3,000.
Operating costs are $12,000.
That leaves $22,000.
If your average portfolio balance is $300,000, your monthly net yield is 7.3%.
That annualizes to roughly 87%.
That is not just activity.
That is actual performance.
If your net yield is thin, flat, or constantly getting rescued by accounting optimism, you do not have a slow
month.
You have a structural problem.
The Real Point
Most subprime lenders do not go broke because they lack reports.
They go
broke because they watch the wrong ones.
If you track charge-off rate by vintage, roll rate by loan type, cost per funded loan, and net yield after defaults, you will see problems earlier.
You will make better
decisions faster.
And you will stop confusing motion with profit.
That is the whole game.
Not looking busy.
Not sounding smart in meetings.
Not staring at a P&L that flatters you while the portfolio quietly rots underneath it.
If you want to stay in this business, you need to know how to loan money to strangers without getting your butt handed to you.
And that starts with the right scoreboard.
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