Should a Passport ever be given for a loan?

grumbler

Stonk wrote:

Eh? That can't be right. Consider just the first week. Amount owed: £1,000; 1 week's interest: £1,000 x 78.52/52 = £1,500...
...which gives a rate of 8.7797% per week, i.e., 457% per year (no, you don't compound it to get 7852%, that's not what the output of RATE means)
...

You are right and wrong. For 7852% APR weekly interest is (1+78.52)^(1/52)-1=8.78%, but not 7852%/52! However, why not to compound it? This is the only correct way to calculate APR. 8.78% per week is 7852% APR.

If you borrow £1000 and don't make repayments you will owe £79520 after a year!

01 1000.00 87.80 -132
02 0955.80 83.92 -132
03 0907.71 79.69 -132
04 0855.41 75.10 -132
05 0798.51 70.11 -132
06 0736.61 64.67 -132
07 0669.29 58.76 -132
08 0596.05 52.33 -132
09 0516.38 45.34 -132
10 0429.71 37.73 -132
11 0335.44 29.45 -132
12 0232.89 20.45 -132
13 0121.34 10.65 -132
14 -000.01

One missed £132 payment in week one will cost you £362 after 12 weeks. This is extra £230!

01 1000.00 87.80
02 1087.80 95.50 -132
03 1051.30 92.30 -132
04 1011.60 88.81 -132
05 0968.42 85.02 -132
06 0921.44 80.90 -132
07 0870.34 76.41 -132
08 0814.75 71.53 -132
09 0754.28 66.22 -132
10 0688.51 60.45 -132
11 0616.96 54.17 -132
12 0539.12 47.33 -132
13 0454.46 39.90 -132
14 0362.36

Phonix

Well I'd pop down to cab if I were you, also maybe a trip to your local MP is in order but primarily you need to contact the police.

Stonk

Ah yes, you're dead right. I think I was doing the equivalent of mixing up "4.89% interest paid monthly" and "5.00% APR paid monthly", both of which mean the same thing (as in ING Direct).

Ember999

I would contact the Police, holding your passport is illegal and they should be dealt with. I would be very concerned if I was you and do someting about this pronto! I'd certainly get the passport back. Good Luck.

sneekymum

Scary thread - why do bad things happen to people who are already down?

Phonix

Out of interest. How did you find that this loan was available?

Milky_Mocha

Slough? They borrowed from a loan shark in Slough??

Phonix

She rang us today, and said that they had got this loan from a place in Slough, which she reckons isn't a loanshark type place. The loan is to pay the back rent.

Slough is the place where she got the Loan correct but my question was moreso who told her about it?

Robert_Sterling_3

A rough calculation

Borrow £1000 pay it back over 13 weeks also pay £716 over 13 weeks

Assume you are repaying capital at the rate of one thirteen of the total each week. i.e About £77 per week Capital repayment and £55 interest.

Then the average amount owed

Week One

Capital on loan is £1000
Interest is £55
Interest rate this WEEK is

55 Times 100%

---

i.e. 5.5% per week
1000

etc etc

In the final week

The interest is £55
The outstanding capital is £77
The interesr rate per week is

55 Times 100%

---

= More than 71% per week.
77


I think 71% per week is pushing it a bit.

grumbler

Robert_Sterling wrote:

A rough calculation...I think 71% per week is pushing it a bit.

Your rough arithmetics dos not work for such huge interest rate. It has been calculated above that the exact interest rate for £1000 over 13 weeks is 8.78% per week, but not 71% :mad: