[Pending][Bug 1.30] Loans are 'iffy'

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Bertie
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[Pending][Bug 1.30] Loans are 'iffy'

Postby Bertie » Mon Aug 28, 2017 1:06 am

First thing - the loan percentages need to be changed. They seem to be in the 6% - 12% range, so in some cases you're actually paying the same value of the original loan in interest. This might seem intentional, but I'd say that you should get a high rate for a short term low value loan and a lower rate for a higher value long term one (like the difference between Wonga and a mortgage).

Secondly the figures quoted are a bit misleading. Taking the below example you'll see it says $710k with an hourly repayment of $1,972, which has been calculated from 710,000 / 15 / 24. Whilst this is right in terms of capital repayment, it doesn't really paint a full picture of the amount you're paying since you'll be paying the interest on top of this, even if this figure is quoted on the page too.

Loans.png
Loans.png (13.4 KiB) Viewed 1063 times

That interest figure is also a bit misleading too, as that is based on the current outstanding amount on the loan. Again that is technically right, but if you're looking at the loan list and trying to plan for the future then really (I'd say) you'd be more interested in knowing the average interest payment you'll be making over those 15 days, even if you are taking more of a hit in the short term whilst the loan ticks down. So in this example the amount of interest you'll actually pay would be half of what is quoted which is $1,274

If it were me I'd probably change it to say:

Hourly capital repayment $1,972
Hourly interest $1,274
Hourly total cost = $3,246

Although as I'm writing this I'm wondering if it would be easier to simply pay the same interest amount off each day rather than the interest amount being recalulated every hour. I'd say that most people take a loan so they can expand with the aim of making more money in the future, so it would be in their interest to actually pay the same amount throughout the course of the loan rather than getting hit with high interest values whilst cash is short then lower when the factory has begun to progress a bit more and money is in better supply.

All the above might have been a design decision and I'm basing my thoughts on personal finance rather than business which may work differently but it's something I at least wanted to get clarified!
kgib321
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Re: [Bug 1.30] Loans are 'iffy'

Postby kgib321 » Sat Oct 07, 2017 4:50 am

When a company pays of a loan in full/ does not default it build credit worthiness. Companies take loans and pay them off a few days later all the time. The loan rate does not typically increase when there is a loan origination. I suggest that loans can re-reused. Just my thoughts from being in a finance background.
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cliffski
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Re: [Bug 1.30] Loans are 'iffy'

Postby cliffski » Sat Oct 07, 2017 1:52 pm

Hi, its a good point that 'repayment' is badly worded there. I will amend it...

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