Heavy Lifting - thoughts and web finds by an economist
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Thursday, June 07, 2007
The going rate for a thirty-year mortgage is around 6%, and for a home equity line of credit you might get 8.5% or so. Unsecured credit, such as credit cards, might be at 18-20%. How about the rates at Cash Call?
Loan amount: $5,075 Loan
Interest Rate: 59%
Number of Payments: 84 (that's seven years!)
Each payment: $254.03
Total Payments: $254.03*84 = $21,338.52
The odds of default must be huge, hence the high interest rate. Yet, I have always wondered how much of the chances of default are a function of the interest rate. I am sure that someone has investigate this, either theoretically or empirically, but I have never had the time to look it up.
As a matter of fact, these loans are open to all the borrowers irrespective of their credit status. This implies that borrowers with credit anomalies such as CCJ's, IVA, arrears, defaults etc too can apply for these loans. for more information about 6 Month LoansPost a Comment
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