Interest Rates

Transparent Interest Rates: Fixed Initially but Adjustable with Notice

Credit Vaults offer transparency and flexibility when it comes to interest rates:

• Fixed at Launch: Interest rates are initially set by the borrower and locked in at pool creation. This provides lenders with a clear understanding of the potential returns throughout the loan term.

• Borrower-Initiated Changes: Borrowers can propose adjustments to the interest rate after launch, but under specific conditions.

• Rate Increases: Borrowers can increase the interest rate at any time without prior notice to lenders. This incentivizes early participation and rewards lenders who commit early.

• Rate Decreases: To protect existing lenders, decreases in interest rates require careful consideration:

  • Advance Notice: Borrowers must submit a request to decrease the rate at least 2 full notice periods in advance (e.g., if the notice period is 2 months, the request must be submitted at least 4 months before the desired change). This allows lenders ample time to withdraw their funds if they don't agree with the new rate.

  • Effective Date: The new, lower rate will be implemented during the first repayment date following the advanced notice period.

This approach ensures lenders have clear expectations while providing borrowers with some flexibility to manage their borrowing costs.

Managing Borrow APR Changes

Credit Vaults ensure clear communication and borrower control when it comes to interest rate adjustments:

• Latest Request Takes Priority: If a borrower submits multiple requests to change the Borrow APR, the most recent request takes precedence. This eliminates confusion and ensures everyone is on the same page regarding the current rate.

• Notice Period Recalculated: When a new APR request is submitted, the notification period for lenders restarts. This gives lenders time to react to the potential rate change.

• Immediate Increases: Importantly, increasing the Borrow APR does not require prior notice to lenders. This incentivises early participation and rewards early lenders.

This approach balances borrower control with lender protection, ensuring transparency throughout the process.

Currently submitted	New requests	Effect
Decrease APR	Increase APR	Increase APR is applied immediately
Decrease APR	Decrease APR	Notice period is re-calculated and new Decrease APR date is established.