Both, every month. The car loans amortize, so each borrower payment contains principal and interest, and the portfolio passes that cash through to you. On $10,000 in the base case, the first payment is estimated at about $245 (roughly $138 principal, $107 earnings), payments peak near $355 around month 15, and by month 35 your $10,000 is back in full, followed by about $2,600 of earnings. The explorer above shows the split for any amount and scenario.

Three sources working together: a 12%+ discount built into the purchase price, interest on the full balance for as long as each loan performs, and fast pay-down that shrinks the capital at risk every month. The model starts from the 21% target rate plus the 12%+ discount, then subtracts one-time fees (92.5% all-in cost), 2.5% annual servicing, a 2% annual management fee, and 13.9% modeled net credit losses to arrive at a 13.6% net IRR and about 1.26 times your capital, which is why the target is well below the rate borrowers pay. IRR is the annualized return on money for the time it is actually invested, so a 1.26× multiple over about five years, with most capital back early, works out to 13.6%. Targets are not guaranteed.

The discount absorbs losses first, then the interest rate. The base case already assumes just over one loan in five defaults with 35% recovered at auction. The downside case, with roughly three in ten defaulting and 30% recovered, still returns your capital plus a gain in the model (7.6% modeled net IRR). Losses beyond that would reduce returns further and could reduce principal.

Six years is the outside limit: 60-month loans bought through the end of 2026, plus time to collect on the last of them. Your money is not idle for six years: payments begin the first month after deployment, about 35% is back in year one, about 75% within 24 months, and in the base case the full amount around month 35. There is no early redemption and no secondary market, so plan to hold for the life of the portfolio.

A payment-dependent note issued by a Groundfloor subsidiary that holds the whole auto loans and their vehicle titles. You are not buying the loans directly or units in Parrotfish's fund. The subsidiary collects borrower payments through the servicer and distributes them to note holders monthly.

Newly originated loans from dealerships on the Automatic USA platform, averaging about $15,000 over 60 months. Borrowers are near- or sub-prime; per Parrotfish's underwriting data, the approved credit box averages roughly a 616 credit score. Each loan is secured by the financed vehicle, with title assigned to the Groundfloor subsidiary at purchase.

You receive a Form 1099-INT, not a K-1: no partnership return and no April delay. Nothing here is tax advice. The 13.6% target net IRR is stated net of all program costs, so the figure shown is the figure modeled for you. Groundfloor charges a 2% annual management fee on the outstanding loan balance. Other program costs in the model include a 2.5% annual servicing fee paid to the loan servicer and one-time upfront fees built into the purchase price. The full fee schedule and the subsidiary’s terms are in the offering documents; review them before investing.

Returns are not guaranteed and you may lose principal. Losses can exceed the modeled scenarios, used-vehicle values can fall, the program depends on its partners, and the note is illiquid for its full term. It suits an accredited investor who wants monthly income with a high target return and can hold a position as it amortizes; for money you may need sooner, a shorter Groundfloor Note is the better fit.