← Affirm Interview Insights

Affirm·Data Scientist·Technical Phone Screen·Intermediate

Intermediate
May 2026

Summary

Had a credit risk case question for a Data Scientist role at Affirm. Pretty straightforward loan profitability math, but it's the kind of thing where you either know the mechanics or you fumble around looking lost.

Questions Asked (1)

Q1

A personal loan has a principal of $1,000, a 30% APR, and a 4-month term. Assuming no compounding, inflation, or opportunity cost, what is the total profit on this loan?

Product Analytics & MetricsPricing & Monetization
Author's notes

The math itself is not hard once you see it.

Create a free account to read the full note

AI HintsAI Generated

Suggested Approach

First, clarify the assumptions: the 30% APR is a nominal annual rate, and interest is simple (no compounding). Then compute the interest for the 4-month term by prorating the annual rate, and finally state the total profit as the interest amount, since principal is repaid.

Pro tip: In consumer lending, APR often includes fees, but here it's given as the interest rate. Mention that if fees were included, profit would need to account for them, showing you understand the nuance.

1. Clarify assumptions

Confirm that the 30% APR is a nominal annual interest rate, interest is simple (no compounding), and there are no fees or other costs. Also confirm that 'profit' refers to the interest earned over the term.

2. Convert annual rate to monthly rate

Divide the annual percentage rate by 12 to get the monthly interest rate: 30% / 12 = 2.5% per month.

3. Calculate total interest for the term

Multiply the monthly rate by the number of months (4) and then by the principal: 2.5% * 4 * $1,000 = $100.

4. State the total profit

The total profit is the interest earned: $100. Since the principal is repaid, it is not part of profit.

Key Points to Mention

  • APR stands for Annual Percentage Rate, so it must be prorated for the loan term.
  • Simple interest calculation: Interest = Principal * Rate * Time.
  • Time must be in years if using the annual rate directly: 4 months = 4/12 = 1/3 year.
  • Profit is the interest earned, not including the returned principal.
  • Assumptions: no compounding, no inflation, no opportunity cost, and no fees.
  • In a real-world context, APR may include fees, which would affect profit calculation.

AI-generated suggestions, not part of the candidate's original notes. May be inaccurate — verify before relying on them.