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OT - Finance question

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Originally posted by LiveMusic:

For simplicity, just an example.


Principal = $1000

Term = 60 days

Interest = $100


So, you borrow $1000 and pay back $1,100 in 60 days. What is the "interest rate?" Roughly 60% or what?

Compound interest is typically computed per day, per month or per annum (annually).


Simple interest is a flat calculation based on the value of the transaction.


So $100 on $1000 can be looked at as 10%, maturing in 60 days, or...


at 10%, compounded monthly.


The "universal" formala is:


A = P ( 1 + ( r / 100 ) ) n

n = number of years.

A = Amount after n years.

P = Principal.

r = rate.


For a period of 60 days, $100 dollars interest on a principal of $1000 would equal a compounded interest rate of 60%, but a simple interest rate of 10%.


The qualification is:


Do you have an option with paying back the money? Are you allowed to pay back LESS $1000 + $100 if paid in full say by, day 30?


If you are required to pay back $1100 even, then it's a simple interest type of loan. This helps if it's 60 or 600 days.


If the interest amount changes until the loan is paid off, the interest is being compounded.

NYC Drew

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It's not a real world question, it's just hypothetical. Yes, I am interested in a loan. I have a ship coming in but the damn thing is on an iceberg or something. Until then... I was considering putting up collateral to a friend and offering this deal if need be.


Hey, pawn shops, know what they get? 20% PER MONTH. You read that right. PER MONTH. You get $1000, you pay $200 per month "interest."

> > > [ Live! ] < < <

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Originally posted by LiveMusic:

Hey, pawn shops, know what they get? 20% PER MONTH. You read that right. PER MONTH. You get $1000, you pay $200 per month "interest."

That's because they are loan sharks, just like these damn title loan places. There goal is NOT for you to ever pay off the loan. Actually, according to a Consumer Reports article I read some time ago, the interest ends up being more like 500% when you finally pay the thing off.


On the main street, not far from my house, there is this nice small professional building. A law office used to be there. Well, a freaking title loan place moved in. The first thing they did was to put up a HUGE tacky sign. The second thing they did was to paint the place BRIGHT YELLOW and RED. It's an a eyesore! And it's a slap in the face to the business around them that spend time and money trying to keep their area nice.


I cannot believe people actually go to those places, but there appears to be no shortage of desperate fools around, waiting to be taken advantage of.


It's really sad.

Super 8


Hear my stuff here


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