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RE: Dear fundamentalist dipshits that think charging interest for loans is immoral, fuck you.
Why is it immoral? You say it's immoral but you haven't demonstrated it.
- Renting a car: Moral
- Renting a house: Moral
- Renting 1000 usd: Immoral
Why? All of these things take effort. All of them them require capital. All of them involve risk. The fact you have have deemed the renting of money to be immoral seems completely arbitrary to me.
I think it is because as he said. There are many hidden dangers and people need to understand the total cost. Perhaps that brings us to a way to improve your service by showing people the cost of the transaction in real amortization terms. No one said it should be for free. I see 0% more as a charity as everyone should do to help someone less fortunate. I think he is more articulate than I in describing the hidden dangers that I have been studying for multiple years and barely scratched the proverbial surface. All people see is a payment and can not think in terms of opportunity cost. They were never taught or didnt grasp the importance during Econ101.
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Please continue with this manner of discourse, rather than flagging. I am intrigued by this discussion, and the flagging and ad hominae obstruct it.
Thanks!
I do not say loans are immoral. Please note that I said there are other mechanisms that potentiate profit besides interest.
Loan origination fees, for example. Loans aren't immoral. Please don't confuse loans with interest. They aren't the same thing, despite that it is common practice in the West. There are actually banks that don't charge interest, in the Muslim ME.
Do you consider Loan origination fees moral?
A fee for business just like turning a crop into a product. I have read nothing in regards to morality of collecting an honest wage for work. Interest is subversive because people dont understand or think in terms of total cost.
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I don't understand what's hard to understand? If you get 1000 and you have to pay 1300 back over the course of 2 years, the absolute cost of the transaction is 300, and that's the lender's fee. Where's the hidden danger, problem, cost or difficulty?
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That's not the way interest works though. If an actual fee that was paid over two years in installments was merely added to the principal, I'm totally good with that.
Interest however, doesn't work out that way.
Have a look at amortization tables, and you'll be counfounded at how complex it is to figure out what the actual fee is. Almost no one can figure it out. Basically payments on a thirty year mortgage are almost all 'fee' and very little principal. Interest is the perfect tool for scamming folks, because simple interest is what people assume, but compound interest is different, and mathematically opaque. Further, there are additional mechanisms inherent to interest that are facile to further complicate the matter, and extract yet more from victim's wallets. One more example from mortgages: the interest payments are 'frontloaded' such that initial payments on the mortgage are almost zero principal, and all interest. Only the final payments on the mortgage actually pay much of principal back, and little interest.
Fees are fine because they're forthright. Interest is inherently designed to scam, IMHO.
Are Neoxian's interests really that complicated?
Ehmmm, looks pretty simple to me. 22 Steem fee + original amount, all paid over the course of 10 months.
I completely agree with you. What is shown isn't actually interest, although he may have calculated it as interest, and call it that, but is a stated fee.
I was not addressing @neoxian's business arrangements particularly, but interest generally. While his business is intimately known to him, it is a complete mystery to me, and I did not have any specific knowledge of any deal he has ever made to refer to in my comments, nor did he discuss any specifically.
I hope I have expressed that I feel interest is used to scam people who don't grasp what it will cost them, and if his arrangements are as straightforward as your description - and I do not doubt you are being truthful - then I do not lay any such accusation at his feet.
What I do think is immoral is telling someone they can borrow $100k at 10% interest, and letting them think they will pay back 10% of 100k. Because compound interest doesn't work like that, and most folks have no idea what they are actually paying for their mortgage in dollar amount. Usually it's multiple times the principal they borrowed, and that's just plain scammy.
Thanks!
Check out all of his previous posts. Most of his deals are public.
And about your last paragraph, what? I've never seen that. I should look out for that. Care to show me more concrete examples? I'm not a math junkie but I can understand from example (I understood nothing about your mathematical description of interest in your previous post).
I don't want to make a pest of myself, so don't generally harass folks who don't cause trouble. @neoxian does business, and I have never heard anyone accuse him of doing so in anything other than honorable manner. I only commented here to try to defuse the flags, which seems to have come about.
As to mortgages, or any longterm interest payments, you can find online amortization tables which will do the math for you. A search will be fruitful, as many real estate portals offer such tools to help market their inventories.
A simple tl;dr is that for a short term loan, say only one day, there's no compounding of interest (charging interest on the interest). If you borrow $100k for one day at 1% interest, the next day you owe $101k. Over a longer period of time, more than a month or two, the interest that accrues on the principal is added to the principal amount, and interest is also charged on that (compounding). If you borrow $100k at 10% for 30 years to buy a home, and make the minimum payments, you'll end up paying much more than $110k back, because of compounding, more like $300k (I didn't do the math or even look up an amortization table, so don't hate me if I'm off by less than an order of magnitude. I'm but explaining the principle).
There are also a great many other mechanisms that are often employed to make it even more complex and opaque to borrowers, such as compounding daily, or variably, and variable interest rates that fluctuate (usually based on something called the Prime Rate - if you want to know what that is, you can search for more information), and many lenders also add various fees, such as loan origination fees. The end result is to often hopelessly confuse borrowers, who just want to buy a house at a monthly payment they can actually pay every month. Adjustable Rate Mortgages (ARMs) were a huge contributing factor in the 2008 meltdown, and why a lot of people lost their homes - to scumbag banksters.
Hope that helps to clarify the issue for you.
Not when they are stand alone. I have never paid a loan origination fee that wasn't also accompanied by interest, though. Were the fee the cost of the loan, I would absolutely not find it immoral.
I don't think you're doing something wrong in profiting from your stake by loaning it out.
Alright, so when I loan 100 steem, and ask for 120 steem back, I'll called that extra 20 steem the loan origination fee (that's paid on the tail end), and presto, by the magic of sophistry and word play, I'm moral. Thanks, good to know.
EZ PZ