Interest on interest

[farmaholic]

One more thing, there was a fellow that
had trouble paying his crop supply bill at
the local retailer(small independent), in
the end the retailer wrote off all the
interest just to get the principle, cheap
loan!!

[riders2010]

Well don't know the exact particulars but with todays interest rate I think ripping someone for 30% is pretty much loan sharking. This is an independant dealer who has been expanding his land base with a number of farmers that went broke mainly couldn't pay the input bill there, I could see why now.

More to the story coming out this independant won't give any credit without mortgage of land. And that is his right but 30%??? People need to look elsewhere than to deal with a low life like that.

Surprised somone has rattled his chicklets, but could be coming if he f's over this young family as many locals getting pissed after hearing the interest being charged.

[wd9]

I believe it is only a mortgage is calculated semi
annually not in advance. The rest is open season
to be as short as possible. If it says 2 percent per
month that is your compound period.

100 becomes 102 at day 31. Next month it's
104.04. Interest on interest. They have told you
the compound rate and hid nothing.

[dmlfarmer]

Credit issuers often resort to the phase "On Outstanding Balance" to get around having to detail compounding on invoices. If the terms of the account says 2% interest monthly and the interest is not paid at the end of the month is automatically becomes part of the outstanding balance thus is subject to interest charges.

As far as a 2% rate being too high, or loan sharking - this is just another example of the deregulation of our financial system. Governments have turned a blind eye to financials and consumers are subject to whatever interest charges a company believes the market can bear. If you want to really see exorbiant "legal" interest rates (and charges), just look at what some of the payday loan companies charge the really poor who simply need a few bucks for groceries to make it to there next cheque.

On the question of paying more than 30% annually even though the stated interest rate is 2% monthly, is there a minimum payment due each month? Some credit issuers charge a penaltly if a minimum payment is not covered. Utility companies are prime examples of this whereby if a payment is not made by a certain date, a penalty is charged.

I do not condone what this business is charging but at the same time I doubt there is little legal recourse if the farmer knew the terms of credit when he made the purchase (which by the sounds of it he did.) Just another example of how little protection our society provides those of society who most need it.

[vvalk]

What going on here on this thread. Everyday
single business in this country charges around 2%
per month, which means compounded, on
outstanding accountsc. Check your local napa or
co-op, pricess auto or whereever. doesnt matter
what industry. This is pretty simple stuff. Your 2%
get added to your bill after 1 month and then is
charged 2% on the new balance the next month.
What is a lawyer going to tell you? Take the
money your going to spend on the lawyer and pay
your bill down. Most loans at the bank are done
this way just that you actually pay the interest
every month so your balance doesnt increase and
therefore you don't pay interest on that the next
month.

[Hopperbin]

Don't know all the particulars here but have to side with the dealer. The farmer should not be in that position of not being able to pay off his monthly bill. If the farmer cannot use his financial institution for credit to pay all the bills then the farmer is extremely high risk. Why don't you give this young family the credit if your so pissed off and find out where you sit when you don't get paid.

[Burbert]

Criminal rate of interest in Comedia is
61% according to the Crime Code of
Comedia, so 30% is just angribusiness
doing well business. Yeah ya should
always read the f'n fine print. Get a
telescope and be prepared ta spend a day
er so reading, the legalise sh=t printed
on each and every invoice ya get. In
fact there would no longer be time ta
frame. Retire, sell the fram and enjoy
life ta the fullest.........

[riders2010]

Hopper why don't you kiss my ass if your interested !!!!

As a matter of fact the lawyer he talked to stated anything over 24% is gonna revert the interest to 5%.

Also charged him double for chemical sprayed and would not revert it back a real prick.

When bank rate is what it is this is loan sharking.

How many young guys are able to farm without some credit? And when they get into trouble to take advantage may be in the eyes of the law okey but is immoral otherwise.

[sumdumguy]

Rider, keep us posted. Perhaps we all will learn
about loan sharking. Good lesson though, pay up
your accounts as soon as possible.

I dont know the circumstances, but this was a
lesson we learned in the early eighties when
interest was over 20%.

[stubblejumper]

The only reason someone would pay 24% intrest is they could not get a loan or line of credit from a financial institution at 1 or 2 above prime.