oops, guess that poll question range was too wide, not specific enough

[netmouse]

For those who answered (some form of) Yes, a certain loan interest rate seems excessively high, the majority responded that "too high " starts between 5 and 25 %, and I'd like to see a breakdown on that. Please answer this question too!

[Poll #1343223]

Comments

[yarram.livejournal.com]

Ah, OK, I see now. I was using the wrong numbers to figure the additional rate to apply to the initial 8%. It isn't the (5%/19) I created - it's (total value of one loan/19), which means each of the 19 assumes about 5.25% of the 20th (defaulted) loan. Of course, this assumes all loans are of equal amounts, but from the simplifications inherent in your numbers, that can be treated as a given.

The fact that I screwed up the math I was using doesn't help, either... 5/19 = .26, and I meant to add that to the original 8%. Don't ask me how the leading 8 of "8.26%" turned into a 5. Probably a typo - brain saw '8', finger typed '5'.

[sethb.livejournal.com]

It should really be 1/19 of the total at the end (so calculate the interest without loss, inflation + cost of funds + costs&profit, then multiply by 20/19). But the answer give is close.

5% default per year is really high; banks usually won't lend to that sort of risk (or will charge a lot more than their usual rate).