LGD Calculator – Loss Given Default

This LGD calculator shows loss given default for any credit exposure. Enter exposure and recovery amounts to see your LGD and recovery rate instantly.

LGD Calculator | Loss Given Default Calculator
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Exposure at Default (EAD)
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Recovery & Collateral
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LGD (Loss Given Default) = 1 − Recovery Rate. It represents the percentage of exposure a lender would lose if a borrower defaults, net of recoveries from collateral and other sources.

LGD Analysis
📊 Loss Given Default (LGD): —
0% (Full Recovery) 50% (Partial) 100% (Total Loss)
Loan Balance Outstanding—
Undrawn Commitment—
Credit Conversion Factor (CCF)—
Exposure at Default (EAD)—
Collateral Value (after haircut)—
Direct Recovery Costs—
Other Recoveries—
Total Recoveries—
Recovery Rate—
Loss Given Default (LGD)—
Expected Loss Amount—
Unexpected Loss (at 99.9% confidence)—
LGD Scenarios at Different Collateral Levels
Collateral ValueHaircutRecoveriesRecovery RateLGDExpected Loss

Enter exposure details to view scenarios.

Shows how LGD changes with different collateral values while keeping EAD constant.

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Hasnain Khan

Co-Founder, Techraxy

Hasnain Khan is a digital tools developer and Co-Founder of Techraxy, a platform dedicated to building modern web-based calculators and utility tools. He focuses on tool optimization, website performance, and creating accessible user experiences across categories like automotive, finance, construction, and everyday utilities.

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Introduction to LGD Calculator – Loss Given Default

Loss given default (LGD) is a critical credit risk metric that measures the percentage of exposure a lender loses when a borrower defaults. It is calculated as the complement of the recovery rate: LGD = 1 – Recovery Rate. For example, if a lender recovers 40% of a defaulted loan, the LGD is 60%. LGD is one of three key components used in expected loss calculations, alongside probability of default (PD) and exposure at default (EAD). Banks, financial institutions, and credit analysts use LGD to assess risk-weighted assets, set loan loss provisions, and price credit. This LGD Calculator helps you determine loss given default for any loan or credit exposure. Enter the exposure at default and recovery amount. The calculator shows your LGD, recovery rate, and expected loss. Toolraxy built this calculator to help lenders, analysts, and risk managers evaluate credit risk accurately.

How to Use This LGD Calculator – Loss Given Default

            1. Enter the Exposure at Default (EAD) (total amount owed at default)

            2. Enter the Recovery Amount (amount recovered after default)

            3. Or enter the Recovery Rate (percentage recovered)

            4. Enter Collateral Value (if applicable)

            5. Click Calculate to see your LGD

            6. Review the LGD percentage and recovery rate

            7. See the expected loss amount

            8. Adjust inputs to compare different scenarios

Formula Section

Loss given default formula:

LGD = (Exposure at Default – Recovery Amount) ÷ Exposure at Default

LGD as percentage:

LGD (%) = ((EAD – Recovery) ÷ EAD) × 100

Recovery rate formula:

Recovery Rate = Recovery Amount ÷ Exposure at Default

Relationship between LGD and recovery rate:

LGD = 1 – Recovery Rate
Recovery Rate = 1 – LGD

Expected loss formula:

Expected Loss = PD × LGD × EAD

LGD with collateral:

LGD = (EAD – Collateral Value × Recovery Rate on Collateral) ÷ EAD

Where:

  • EAD = Exposure at Default (total amount owed)

  • Recovery Amount = Amount recovered after default

  • Recovery Rate = Percentage recovered

  • LGD = Loss Given Default (percentage lost)

  • PD = Probability of Default

  • Expected Loss = PD × LGD × EAD

Real-Life Examples Section

  • Example scenario:

    • Exposure at default (EAD): $500,000

    • Recovery amount: $200,000

    • Collateral value: $250,000

    Calculations:

    • LGD: ($500,000 – $200,000) ÷ $500,000 = 0.60 (60%)

    • LGD percentage: 60%

    • Recovery rate: $200,000 ÷ $500,000 = 0.40 (40%)

    • Expected loss (assuming 5% PD): 0.05 × 0.60 × $500,000 = $15,000

    • Risk assessment: High severity.

 
 

FAQs

1. What is loss given default (LGD)?
LGD is a credit risk metric that measures the percentage of exposure a lender loses when a borrower defaults. It equals 1 minus the recovery rate. For example, 40% recovery means 60% LGD.

2. How is LGD calculated?
LGD = (Exposure at Default – Recovery Amount) ÷ Exposure at Default. For example, ($500,000 – $200,000) ÷ $500,000 = 60% LGD.

3. What is a good LGD?
A lower LGD is better for lenders. LGD below 20% is very low risk, 20-40% is low, 40-60% is moderate, 60-80% is high, and above 80% is severe.

4. What is the difference between LGD and PD?
PD (Probability of Default) measures the likelihood of default. LGD (Loss Given Default) measures the severity of loss if default occurs. Both are needed for expected loss calculation.

5. What is the difference between LGD and EAD?
LGD measures the percentage lost. EAD (Exposure at Default) measures the total amount owed at default. Expected loss = PD × LGD × EAD.

6. What is the difference between LGD and recovery rate?
LGD and recovery rate are complements: LGD = 1 – Recovery Rate. Recovery rate is the percentage recovered; LGD is the percentage lost.

7. How does collateral affect LGD?
Collateral reduces LGD because it provides a recovery source. Secured loans typically have lower LGD than unsecured loans. This calculator includes collateral input.

8. What is expected loss?
Expected loss = PD × LGD × EAD. It represents the average loss a lender expects over time. It is used for loan pricing, provisioning, and capital requirements.

Disclaimer

This LGD Calculator is provided for educational and planning purposes only. Results are based on standard credit risk formulas and the numbers you enter. Actual LGD depends on recovery processes, collateral quality, economic conditions, and regulatory requirements. This tool does not constitute financial, credit, or investment advice. Consult a licensed financial advisor or credit risk professional before making lending decisions. Toolraxy is not responsible for any actions taken based on these calculations.

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