is 10% interest already big?
By pentagan12
@pentagan12 (757)
Philippines
June 13, 2010 10:26am CST
My boyfriend and I were talking about a good business to earn extra income and we came up to an idea of lending money. Since we are still beginners, we have decided to start with just a little capital. We will let our friends borrow money from us in cases of emergency. We told some of them that there will be 10% increase and will be paid for 1 month. I was just surprised when some of them told me that 10% is already a big interest. What do you think guys? Please help me know more about the nature of this business. Thanks in advance.
2 responses
@echomonster (2226)
• Greenwood, Mississippi
13 Jun 10
Your friends probably would like you to loan to them at a lower rate of interest out of a feeling of friendship. 10% doesn't seem unduly high given that personal loans are very risky, but maybe you should compare the rates offered by banks, credit cards, etc to determine a fair interest rate. I can't tell whether the 10% rate you're talking about is a monthly or yearly rate, though...if it is monthly, then yes I would say that is much too high. You may expect your friends will always be able to pay you back after one month only, but life doesn't always work out that way!
