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63 sats \ 9 replies \ @Bell_curve 23 Jul \ on: Borrow $60,000 and Pay Back $255,931 charts_and_numbers
Usury is defined as excessive or high interest.
All interest can’t be classified as usury. For example, if inflation is 4 times and the interest you are being charged is less than 4 percent, you are getting a great deal
Make sense, forgot about inflation rate, another tool of control?
In the other side, what defines if an interest rate above X% is usury or not? it's defined by the different legislations across the world? or there's a Y% defines as a global value?
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You can’t have a global value because of different currencies and rates of inflation
I would start with the 10 year treasury yield as a benchmark
If the yield curve is inverted then look at the 1 year or 90 day yield
Anything above can be considered usury except
If a borrower has terrible credit history then a lender has to raise borrowing rates to reflect credit risk
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Thanks! This makes much more sense, I assume this approach on the calculation is applicable everywhere.
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Thanks
We tend to look at the borrower's perspective only or the lender's perspective only and we should look at both for a fair and balanced perspective
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do you mean that credit history of the lender should be on the table in this type of situation?
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The borrower is asking and trying to persuade the lender to lend him money
The lender has to ascertain the credit risk of a borrower: high, low, medium, etc
Most lenders have certain criteria before they even consider a loan application
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it's basically on us to make the due diligence and check before going out to the first entity to ask.
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A borrower can seek pre-approval and the lender will know right away if the borrower meets their minimum requirements
typo
inflation is 4%
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