The previous post on Ah Long (Loan Shark) interest rate Calculation is wrong. It is because the Ah Long will not every month take out fresh cash out. They are using the existing amount of money to loan out. The Ah Long claim that they charge a 20% interest rate per borrow i.e Borrow $1000, they charge 20% and only give you $800. In actual case it should be 25% interest rate per borrow. You borrow $800 but need to pay back $1000. Then if this Ah Long has a cash capital of $800 and he loan out every month. How much will he earn ? Let do a simple calculation. A person "A" every month on 1st day borrow $800 and by instalment 5 times in every 6 days pay $200 back. Ah Long will have earned $200 per month.
So cash capital in Jan = $800.
Every month earned = $200
One year earn = 12 x $200 = $2400.
Interest Rate per year = $2400 / $800 = 300%
It is a very huge return as compare to my previous assumption.
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