This is intended as a service fee, not interest. It is set at a level that, along with registration fees and lender tips, just covers our operating costs. (For example, in the first quarter of 2014 our average operating costs were $8,225 per month. Our average monthly revenues were $8,507.)

It might be more precise to structure the service fee as a fixed percentage of the loan amount regardless of the term. We opted to structure it as an annual rate mainly for simplicity: it can be added to lender interest so that loan applicants can see the full cost of the loan in a single rate, without any other unexpected fees.