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> 6. The vast majority of our borrowers are used to flat rates being quoted by local lenders I hadn't considered the cultural differences of the target audienc

> 6. The vast majority of our borrowers are used to flat rates being quoted by local lenders I hadn't considered the cultural differences of the target audience. This would be dishonest for a US market, but I understand it here.

unclebucknasty 13y ago
>This would be dishonest for a US market, but I understand it here. I don't know about this line of reasoning. If, as appears to be the case, flat rates were designed to mislead borrowers into thinking they were getting lower rates, then engaging in that practice doesn't seem to be any more just, simply because others in the market are doing it. APRs were mandated in the U.S. for a reason. I get that they need to show competitive rates, which means showing APR vs. competitors' flat interest wouldn't work without additional explanation. However, there are fairly easy ways to educate their market and do so in a way that differentiates themselves even further, especially if their pricing is really significantly better. For instance, if I were a potential client, I would greatly appreciate a quick lesson on APR, and a comparison to competitive programs that re-expresses their rates in terms of APR. You'd earn good will for transparency/benevolence and my business for the better rates.
- vidarh 13y ago
  If the people they are comparing to is giving flat rates, then if they get an APR they need to be able to convert one number to the other to understand which is cheapest. I suspect even most Western consumers who are used to credit would get that wrong a lot of the time. The flat rate is horribly misleading if you are comparing the flat rate for a fixed period of loans with different repayment periods, which might be the case if relying on advertised rates intended to mislead. It's fine, on the other hand, if the potential borrower goes to lender A and B and requests a quote for a specific loan period. But I agree with you that a quick lesson on APR and showing APR also would be great.

unclebucknasty 13y ago

>This would be dishonest for a US market, but I understand it here. I don't know about this line of reasoning. If, as appears to be the case, flat rates were designed to mislead borrowers into thinking they were getting lower rates, then engaging in that practice doesn't seem to be any more just, simply because others in the market are doing it. APRs were mandated in the U.S. for a reason. I get that they need to show competitive rates, which means showing APR vs. competitors' flat interest wouldn't work without additional explanation. However, there are fairly easy ways to educate their market and do so in a way that differentiates themselves even further, especially if their pricing is really significantly better. For instance, if I were a potential client, I would greatly appreciate a quick lesson on APR, and a comparison to competitive programs that re-expresses their rates in terms of APR. You'd earn good will for transparency/benevolence and my business for the better rates.

vidarh 13y ago
If the people they are comparing to is giving flat rates, then if they get an APR they need to be able to convert one number to the other to understand which is cheapest. I suspect even most Western consumers who are used to credit would get that wrong a lot of the time. The flat rate is horribly misleading if you are comparing the flat rate for a fixed period of loans with different repayment periods, which might be the case if relying on advertised rates intended to mislead. It's fine, on the other hand, if the potential borrower goes to lender A and B and requests a quote for a specific loan period. But I agree with you that a quick lesson on APR and showing APR also would be great.