bank interest - what does it mean?

i went and priced out a few of my items at the old pawnshops/banks and found something i want to ask about.

the interest and terms are all different, but what that mean on a daily basis?

here are the break downs:

Neverdie- 15% for 30 days
Veterns - 45% for 180 days
Moneta - 40% for 15 days
Ashne - 35% for 30 days
Wirecard - closed

so if i have an item that i can get +1000 on, what does that translate to over the course of the loan?

say i get 3000 ped from the bank.

after 15 days what do i owe?
after 30 days what do i owe?
etc.

regardless of the interest, i feel moneta's 15 days is too short for me and it is likely i'd lose my item lol.

The rates are APR so it is based on annual or yearly even though the terms are much shorter than that--You only pay for the days you borrow--ex of formula is:

amount of loan=3000 peds
intrest rate=15% APR (All are APR)
Term=30 days

So 3000X15%=450

450 + 3000 is what you owe for 1 year of loan=3450-But your term is only 30 days so divide 450 by 365 to get daily cost on intrest which =1.23 peds a day times 30(the term)=36.99--so if you went all 30 days you owe 3036.99 peds to get your stuff back--Basically you paid roughly 37 peds for the loan. Hope that helps you.

*EDIT* got it all wrong, pay no attention to the man behind the keyboard

A couple things to keep in mind about the Banks m8:

Number 1--NEVER get a loan becuase you HAVE to--get a loan because you can and want to wait on a depo but don't try to "Fund" your activities with a loan--you will most likely lose your stuff that way

Number 2--You only pay for the days you have the loan out so no matter what the term you can pay the loan quicker and save money on intrest.

Number 3--Different banks offer different amounts on items, try to get the amount you need out of as few loans as possible. There is a min. charge per loan and you are paying intrest on each loan for each day so it makes sense to have as few as possible at one time.

Number 4--Check how far out the maint. fee on the bank is paid versus the time you are going to take to pay the loan--Some people have gone back to a bank to pay the loan off only to find the maint. fee expired and no way to get inside to pay it--I'm sure MA has addressed this issue but a quick check at the estate terminal could save you a headache.

Number 5--Pay your loan off BEFORE the day it expires--No need to run it all the way up to the last day. If your term is 30 days pay it in 28-29 days MAX. Don't take a chance on loss connection/server down or other technical issues I could only imagine--Play it safe pay early!!

Good Luck M8--Contrary to what some would say the Banks do serve a purpose and if used properly and safely you won't lose your items and you could benefit from the use of them. I was hesitant at the start but have used them a few times now and rather enjoy the service especially when the rates and terms are fair--Not to plug anyone particular bank but ND has done a nice job with his and the rate is extremely fair IMHO. GL m8

EarlVonKippler said:

regardless of the interest, i feel moneta's 15 days is too short for me and it is likely i'd lose my item lol.

Click to expand...

yea, the 15 days is too short for me. not because of funds lacking, but rather, i just don't think i'd make it back in time. lol.

thank you very much for your advice gandolf, exactly what i was looking for. i am going to make a short excel sheet to determine my best bang for my buck

Glad I could help m8--Keep in mind that just like in the real world these banks are changing their services all the time too. Rates go up and down, Terms get shorter and longer--and most importantly item values are updated constantly--these guys put in a lot of work to make them as competitive as possible so it pays to look around each time you plan on doing some banking business.

Gandolf said:

The rates are APR so it is based on annual or yearly even though the terms are much shorter than that--You only pay for the days you borrow--ex of formula is:

amount of loan=3000 peds
intrest rate=15% APR (All are APR)
Term=30 days

So 3000X15%=450

450 + 3000 is what you owe for 1 year of loan=3450-But your term is only 30 days so divide 450 by 365 to get daily cost on intrest which =1.23 peds a day times 30(the term)=36.99--so if you went all 30 days you owe 3036.99 peds to get your stuff back--Basically you paid roughly 37 peds for the loan. Hope that helps you.

Click to expand...

If the rates are APR, surely that means the rates are compound interest? So you can't just divide 450 by 365 to get the daily interest, you have to use the compound interest formula. Ditto to get the amount payable for 30 days.

It would be so much easier if the amount actually payable were displayed instead of just the interest rate.

chevrons said:

If the rates are APR, surely that means the rates are compound interest? So you can't just divide 450 by 365 to get the daily interest, you have to use the compound interest formula. Ditto to get the amount payable for 30 days.

It would be so much easier if the amount actually payable were displayed instead of just the interest rate.

Click to expand...

They are NOT compounded daily--I use "APR" to represent the fact that the intrest is based on an "Annual" or "Yearly" term even though the terms provided by the banks are much shorter--In fact I think the longest term they can go is 120 Days but a bank owner would have to clarify that--120 is the longest term I have seen.

In the real world a bank "ROLLS" your charges for intrest into the loan daily(making it Compound) Our banking system does not do that--It simply adds the daily intrest to the payoff amount due-So you can just figure your daily intrest per my formula and go from there--OC It might be off a pec or two depending on the rounding up or downs but other than that it will be correct.

I searched for a definition of the interest figure, but couldn't find one.

How do you know the interest is simple not compound? (I haven't used a bank, so perhaps you have experience of actual figures)

If, as you say, it is simple, then the interest rate for 30 days would actually be higher than if it were compound, making the extortionate interest rates even worse than they already appear.

For Mindark to use a calculation method which differs from normal Bank practice, and which deceives the borrower as to the actual compound interest rate would be reprehensible if true.

I have used the banks, I built my formula off of using the banks and I will oc continue to use the banks--I find them to be a valuable resource when used properly.

180 is the longest loan length.

If you borrow 1000 PED and pay interest of 400 PED after a year, this equates to a rate of either 40% simple or 33.66% compounded daily (the way loans have to be quoted by law, at least in the UK)

If you borrow 1000 PED for 60 days, at 40% simple interest, you pay 65.75 PED interest; at 33.66% compound, you would pay only 56.86 PED interest.

Similar calculations can be done for other periods, the shorter the period, the bigger the % difference.

This makes RL loans look even better in comparison.

chevrons said:

If you borrow 1000 PED and pay interest of 400 PED after a year, this equates to a rate of either 40% simple or 33.66% compounded daily (the way loans have to be quoted by law, at least in the UK)

If you borrow 1000 PED for 60 days, at 40% simple interest, you pay 65.75 PED interest; at 33.66% compound, you would pay only 56.86 PED interest.

Similar calculations can be done for other periods, the shorter the period, the bigger the % difference.

This makes RL loans look even better in comparison.

Click to expand...

The formula I stated is how you can figure what you will pay for a loan in game--I can't/won't argue what is legal here or there or if it is simple-compound cuz honestly i don't see it as either really-But the thing you are leaving out of your equation when comparing these loans to RL loans is the fees to deposit AND the fees to withdrawl--I think if you were to look at these on top of the intrests charged(again per my equation as it is TRUE for these loans) you might see that RL loans are NOT better-especially when a virtual bank like Neverdies only charges14.99%.

I don't make any money off the banks-I'm not a partner or owner of any of them I don't benefit in any way by having others use the banks. I have found that the banks are beneficial, they provide liquidity in the Virtual World that is not as easily obtainable without them. If you don't feel the banks are useful simply don't use them but if you are going to draw comparison between Virtual banks and RL banks use all the proper numbers, and ALL the fees associated, when doing it. Compare the BEST bank terms in virtual world to the BEST YOU can find in RL--Not to mention that different people get different rates in RL where as in here everyone gets the same rate.

I could never see using a bank in game to make a huge purchase like a Land Area or Mod Fap--I also don't think that would be a good idea--If you decided to get a loan for such a purpose I would almost certainly say that doing it in RL would be better then transfering the money in game to make the purchase. But I think that the in game banks allow you to borrow 200 USD for a short period of time for far less that any real real world bank/credit card is going to do--again make sure you factor all fees, do the proper conversions for peds to currency and take into consideration Deposit AND withdrawl fees as all these fees would be associated with the transaction.