Interest on interest

[wd9]

Agreed vvalk. What is the real issue? Its
not loan sharking, not out of the ordinary
in any way whatsoever. Not illegal, its
just compounded interest on unpaid balance
like every bill/loan on the planet.

[highwayman]

The reason why the interest would revert to
5%/annum from 2%/month is I suspect that the
retailer has issued a writ against this individual in
order to collect this account. When a writ is issued
interest is automatically locked to 5 % to my
knowledge. He's actually doing the fellow a favour
by taking this action.

[riders2010]

No the original bill stated 2 percent, he charged what would equal 30% starting first month. Kid has lucked out with a lawyer that worked on some group advocacy for borrowers or something like that. Which set precident that if you do not state the effective interest rate on original bill and you charge more than the for example the 2% per month of original balance your interest is reverted to 5%.

For those so sympathetic to the ass hole. Yes it is simple if you do not want to give credit don't but why is it that they are all at the magical number of 2% per month when bank rate is prime plus a couple, how the f is 24% never mind 30% ethical?

So in that case is it ethical for me to charge grain companies interest if they do not take my grain on date specified? Why not 30% a month if you do not take my malt? We are so brain washed into thinking that its normal for us to be f'd over its hilarious how stupid we are as farmers.

[countryguy]

"We are so brain washed into thinking that its normal for us to be f'd over its hilarious how stupid we are as farmers."

I think that is the most truthful statement that I have ever read on Agri-ville.

[wd9]

Riders, simple, include it in the
contract.

[ColevilleH2S]

Riders2010 your example in the last
paragraph is not comparable. Since
possession is 9/10ths of the law, you
would still control your malt in the
bin, where as the young guy in question
has taken home the crop inputs.

I still do not have an issue with 24% or
even 124%. As long as the two parties
agree to it beforehand.

He is an adult correct?

[boarderbloke]

riders2010,,,This "Kid has lucked out with a lawyer", maybe for now. Think he'll be buying any inputs from that retailer again? maybe if it's cash on the barrel, or a credit card swipe on the spot, or approved bank credit, otherwise I don't see him ever leaving that retailers yard with chemical, and not paying first. How far of a drive to the next retailer?? Oh ya, the word will spread on that kid too, and other retailers will hear the news PDQ. Alot of retalers have been stung over the years, and as a purchaser of inputs, I hate seeing my prices go up because some flunkie stiffs a retailer and that same retailer trys to recoup his losses on the back of the good paying customers.

The "kid" should've sold more canola at $14.50 this fall and payed his bill on time, he'd have better credit and a better reputation!

Really! how bright is this "kid"??? Even if he didn't think the interest was going to be compounded, it had to aleast be obvious that the interest would mount to 24% over the period of a year!!! or did he think he was getting a cheap loan at 2% for the year, I'm just wondering.

riders2010, just wondering what kind of terms, do you think the lawyer, will give "this kid"?

[riders2010]

This kid is probably like alot of other kids wanting to farm that don't have mom and dads backing.

As for his canola it was invigor and was shit but even though it was shit it blew and ended up in some of my trees and mixed up with many others canola all over the country side. So not much to sell at all.

So tell me who took more risk the kid or the input supplier? The input supplier will get his money one way or another. And after he adds his 30% to the already what 60 70% mark up wow what a loss what a pillar of society and what a low life that kid is for even attempting hey? What will the kid end up with for taking the real risk?

[riders2010]

coleville the agreement was 2% not equivilant to 30%. Although I am sure like most farmers he was thinking of how good the prices are and of getting a decent crop where even getting hosed by 30% would have been do able.

I cannot for the life of me believe people think that level of interest is acceptable given the bank rate????

And as far as my example not comparable the minute we farmers sign a contract we do not own anything except more risk in insuring that we provide the product, if it spoils etc we have to make up the contract. And while I am waiting for my money I am paying interest on my bills too or foregoing money that I could have made on the next investment. How stupid and one sided is that? Why am I not entitled to interest? I provided the grain they have a blurp where they cannot provide the money just like the kid so what is different?

[Hopperbin]

27 to 30 percent is only 3 percent interest yet on a 100 thousand dollar bill its 3000 per year extra instead of 27000 it was supposed to be. Not sure where you farm but I have quite a few retailers where I am from and if I do not trust them for a spraying charge or fert application fee etc I would ask before hand what is the cost and go elsewhere. What is the lawyer fee, maybe 10 grand up front? Hopefully the interest is 5 percent per year not 5 percent per month, wow that would suck royally. What about his land rent? Etc. On the other hand when we sell our grain we should be taking a down payment which could allow the buying to walk leaving his down payment at least when we sell to the Vittera ect we don't have to deal with waiting a year for payment and wondering if its coming.

[sumdumguy]

The trouble with credit is that "outstanding
balance" phrase. Best to sell enough to square
up your accounts, but as we all know, there can
be crop failures and short crops that make that
pretty tough. Gotta figure that into the equation
when you sign on for the debt.

[riders2010]

2 more farmers stepped forward today contacting the kid with same thing done to them. Would imagine if everyone steps forward and interest gets reverted back could be a chunk of change? Pretty sure but not certain but I think one of those guys may have lost land to the supplier previously, wouldnt that be a mess to sort out?