How is the interest rate of the borrower defined?

We apply a risk-based pricing methodology. Borrowers from segment S will receive the lowest interest rate and segment D the highest.

We define the pricing having two objectives in mind.

• First, on each segment, Klear should be cheaper than the other players, especially banks, in order to ensure a positive selection and attract the best borrowers.
  
  
• Second, on each segment, we defined an expected return for the investors, after risk.
  
  For example, borrowers from Segment B will pay on average a yearly interest rate of 8%. Assuming that on average, each year 2.3% of the remaining principal is not paid (defaulted), then the net return should be 5.7% yearly, providing that the investor is well diversified in a large number of loans.
  
  For segment D, we target a higher return after risk because this segment is more sensitive to a deterioration of the economy.

As we are a marketplace, conditions would be adjusted regularly in order to find an adequate balance between borrowers and investors.