Private credit: A short primer comparing portfolio yields and servicing fees of different assets
Private credit is an increasingly important part of the funding mechanism for fintech and non-fintech companies. But founders are not clear about investor expectations based on their product.
If you are building a lending company, it’s quite helpful to understand yield and fee expectations for your asset class.
1. How much yield would will I get from this portfolio?
2. How much money can I make given their expectations?
The answers to both of these questions can be generally understood well by reading securitization reports. Even if there are no direct comparables for one's exact product, similar verticals hold clues to investors’ expectations.
In this post, I'll review and compare securitizations from a few key verticals.
I’ve included interest rates (gross portfolio yield) and servicing fees, including the driving factors for each of these assets.
Personal Loans
Unsecured consumer installment loans are typically used for debt consolidation, major purchases, or personal expenses. Terms range from 24-84 months with fixed monthly payments.
Portfolio yield:
Marlette Funding (Best Egg): 14.66% - Targeting prime borrowers with 725 average FICO and $130k average income
Upstart: 24.2% - Using AI to underwrite near-prime borrowers, considering factors beyond FICO
Oportun: 28.12% (unsecured) / 27.15% (secured) - Serving underserved communities with limited credit history
Reasons for differences in yield:
The 1,300+ basis point spread reflects dramatic differences in borrower credit profiles. Marlette targets prime borrowers with established credit, while Oportun serves borrowers who often lack traditional credit scores. Upstart sits in between, using alternative data to identify creditworthy near-prime borrowers. Loan size also matters - Best Egg's $18,316 average balance enables lower rates through economies of scale (indicating high creditworthiness) versus smaller loans.
Servicing Fee:
Reach Financial, Marlette, Pagaya: 1.00-1.10% - Highly automated, digital-first servicing
Oportun: 3.50% - Full-service model including financial coaching and flexible payment programs
Reasons for differences in servicing fee:
The 250 basis point gap reflects fundamentally different servicing philosophies. Digital-first lenders leverage automation to minimize human touch, while Oportun's CDFI mission requires intensive borrower support including financial education and payment flexibility for struggling borrowers.
Credit Cards
Revolving credit lines for subprime borrowers, often with low initial limits ($300-$2,000) and various fees. Used for building/rebuilding credit and everyday purchases.
Portfolio yield:
Mission Lane: 32.09% APR - Serving 2M+ members focused on credit building
Continental Finance: 34.5% APR - Deep subprime focus with 580-660 VantageScore range
Reasons for differences in yield:
Both cards target similar demographics, but Continental Finance's slightly higher APR reflects its focus on the deepest subprime segment. The high rates compensate for elevated charge-off risk and smaller balances that limit fee income. Credit limits also influence pricing - Continental's $300-$2,000 range means fixed costs must be spread across smaller balances.
Servicing Fee:
Mission Lane and Continental Finance: 3.50% - Among the highest servicing fees in consumer lending
Reasons for differences in servicing fee:
Subprime and deep subprime credit cards require the most intensive servicing of any consumer product. Daily authorization decisions, fraud monitoring, customer service for payment issues, and regulatory compliance for vulnerable populations drive costs. Unlike installment loans with predictable payments, revolving credit requires constant account management.
Auto Loans
Secured installment loans for vehicle purchases, with the vehicle serving as collateral. Subprime auto loans typically feature extended terms (60-84 months) to lower monthly payments.
Portfolio yield:
Tricolor: 16.64% - Buy-here-pay-here model serving Hispanic borrowers, 68% without FICO scores
Westlake: 19.70% - Traditional subprime lender, FICO 500-700
American Credit Acceptance: 24.77% - Deep subprime with prior credit difficulties
Reasons for differences in yield:
The 800+ basis point spread reflects different risk assessment approaches. Tricolor's specialized underwriting for no-FICO borrowers actually achieves lower rates than traditional subprime lenders, suggesting their community-based model creates value. American Credit's highest rates reflect their willingness to serve borrowers with recent defaults or bankruptcies.
Servicing Fee:
Tricolor: 3.00% - In-house collections with bilingual support
Westlake & American Credit: 4.00% - Traditional subprime auto servicing
Reasons for differences in servicing fee:
Auto loan servicing is expensive due to collateral management, skip tracing, and repossession costs. The 100 basis point premium for traditional subprime lenders likely reflects higher delinquency rates and more aggressive collection practices versus Tricolor's relationship-based approach.
Small Business Lending
Short-term working capital loans and merchant cash advances for small businesses. Terms typically under 24 months with daily or weekly payments.
Portfolio yield:
OnDeck: 48.26% APR on 15.1-month average terms
CAN Capital: ~48% expected return on ~9.6-month terms
Fora Financial: Undisclosed yield on 13.6-month terms for 550+ FICO businesses
Reasons for differences in yield:
Small business lending commands the highest yields in mainstream lending due to elevated default risk, short terms that increase origination costs, and limited competition. The similar pricing between OnDeck and CAN Capital suggests market equilibrium around these levels. Daily/weekly payment structures also enable higher effective yields than monthly payment products.
Servicing Fee:
OnDeck & Fora Financial: 1.00% - Highly automated, integrated with business banking
CAN Capital: 3.00% - More hands-on merchant support
Reasons for differences in servicing fee:
The 200 basis point spread reflects different service models. OnDeck's technology platform automates payment collection through ACH integration, while CAN Capital's merchant cash advance model may require more active account management and merchant support.
Equipment Finance
Secured loans or leases for business equipment purchases, with the equipment serving as collateral. Terms typically match equipment useful life (3-7 years).
Portfolio yield:
Wingspire: 9.51% - Middle-market companies, often sponsor-backed
Post Road: 10.49% - Essential-use equipment for corporate obligors
Reasons for differences in yield:
The modest 98 basis point spread reflects a mature, competitive market with standardized underwriting. Both lenders target established businesses with predictable cash flows. The secured nature of equipment loans enables single-digit yields while maintaining profitability. Post Road's slight premium may reflect smaller average deal sizes or less creditworthy obligors.
Servicing Fee:
Wingspire and Post Road: 1.00% - Industry standard for equipment finance
Reasons for differences in servicing fee:
Equipment finance has converged on 1.00% servicing fees due to standardized processes, minimal customer interaction, and straightforward collateral management. Unlike consumer loans, business borrowers rarely need payment assistance, and equipment repossession is simpler than vehicle recovery.
Specialty Finance
Niche lending products serving specific use cases or demographics, including home improvement loans, solar financing, and education loans for international students.
Portfolio yield:
MPOWER (International Student Loans): 11.93% - No FICO requirement, 139-month terms
GoodLeap (Home Improvement): 12.50% - Point-of-sale financing, 150-month terms
GreenSky (Home Improvement): 12.91% - Merchant-partnered financing, 111-month terms
BHG (High-Income Professionals): 18.02% - $236k average income, 736 FICO
Reasons for differences in yield:
Specialty lenders command premium pricing for solving specific problems. MPOWER's low rate despite no FICO requirement reflects their focus on high-potential international students at quality schools. Home improvement lenders cluster around 12-13% due to competition and long terms that reduce monthly payments. BHG's higher rate seems paradoxical given their high-income borrowers but likely reflects unsecured lending and larger balances ($82,661 average).
Servicing Fee:
GoodLeap: 0.75% - Lowest servicing fee in our analysis
MPOWER, BHG: 1.00% - Standard specialty finance servicing
GreenSky: 1.10% - Slightly higher for merchant-integrated model
Reasons for differences in servicing fee:
GoodLeap's remarkably low 75 basis point fee suggests highly efficient operations, possibly due to strong merchant partnerships that handle customer interaction. The modest range (75-110 bps) indicates these products require less servicing than traditional consumer loans, with educated borrowers and merchant relationships reducing support needs.
Mortgages
Long-term loans secured by residential real estate, typically 15-30 year terms with fixed or adjustable rates.
Portfolio yield:
Rocket Mortgages, PMT (Prime RMBS): Undisclosed yields but typically 4-6% for 776 average FICO
Santander (Non-prime RMBS): Higher yields for mix of QM and non-QM loans
Reasons for differences in yield:
Mortgage yields primarily reflect credit quality and loan type. Prime investment property loans command modest premiums over owner-occupied due to higher default risk. Non-QM loans that don't meet standard underwriting criteria can yield 200-400 basis points above prime mortgages.
Hope this was helpful.
Please feel free to reach out if you need help with building your lending portfolio.
*Data is sourced through securitization reports across 2024 and 2025.