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Frequently those 10% loans are for, say, 6 month payback periods so the effective APR is over 20%.
by pbreit 11y ago
Frequently those 10% loans are for, say, 6 month payback periods so the effective APR is over 20%.
- fludlight 11y agoAlso, the typical borrowers tend to have at most a rudimentary knowledge of finance so they don't understand the terms of the loan. Sometimes they don't even bother reading the loan agreement. This makes anecdotal evidence extra unreliable.
- HappyTypist 11y agoGenerally interest is annualised and measured in APR.
- pbreit 11y agoActually, on these types of loans, generally not. For example: https://squareup.com/capital https://squareup.com/capital I don't really get how they arrive at their numbers but on first glance it looks insane. On the $10k loan with the $1,300 fee. If you had daily sales of $1,000 you'd pay the loan off in 100 days making the APR somewhere around 50%. They are frequently fee-based, not rate based. And are frequently less than a year with the rate being highlighted, not the APR.