Kind Hearted Bank Worker

[autumnstars]

Me and my boyfriend are somewhat short on cash, but we are getting money in early January. So my boyfriend decided he was going to pawn his truck for a few hundred dollars so we could buy food and pay the gas bill this month. We had to go to the bank and get his title signed into his name, its payed off but the title wasn't updated. The teller had us talk to a lender about getting a loan against his truck or just on our credit. So we sat down with the lender, and he looked up our credit scores, my boyfriend's was pretty bad due to his messy divorce and mine is okay but I don't have any type of real credit (only my school loans and my lease on the apt), so we couldn't get a loan. The lender asked how much we wanted to borrow and we only really needed around 200$, so he decided to give us the loan even though we weren't approved. He just gave it to us because we looked like honest people and we could be trusted. He didn't even charge us interest rates, we just have to pay him back 220$ by the 12th of January. That was the kindest thing someone has done for us, my boyfriend was almost in tears he was so happy. After we got the money we were in the car talking about what we could do to repay him when we get our money in January. Anyone have any ideas?? I did notice on his desk were pictures of his wife and daughter, so I was thinking something like a gift card to a fancy restaurant with extra cash for a babysitter.

[duhrich]

You really should not get him a gift card or anything, he probably would not be able to accept it, so you'd be putting him in an uncomfortable position. Yes, he is taking a small risk on you, but it is still a business transaction. A note of thanks for taking a chance on you when you pay off the loan would be appropriate.

Darcy

[MadMadge43]

Considering he charged you 120% interest I think he's going to make out just fine.

Edited to add: I understand you were in a tough position and you're probably young. But he took advantage of you and made it look like he was doing you a favor. His interest rates are worse than a PayDay Loan center. And those are under investigation for taking advange of the poor, they're even being banned in some cities. 

He makes it seem like you can't complain about being ripped off because he's doing you a favor, but believe me, these loans make them tons of money. 

I would NOT get him anything! Be glad you're only losing $20 in the process.

[Shoo]

I wouln't get him anything either.  For one thing, it's not HIS money he's loaning you, it's the bank's.  They're in the business of loaning money. Maybe he took a risk loaning it to you, but it's only $200 and he made the decision to loan it.  It was his decision to do that.  He obviously mitigated any trouble he went to for you by charging you 120% interest.  Scandalously high interest.  He may have thought he was doing you some kind of favor by making the interest amount some kind of flat rate, but a rate like this is akin to loan sharking. 

So, perhaps he did you a good deed.  Perhaps not.  Depends on how you look at it.

[ShadesOfGrey]

um, can I ask how you are calculating the 120% interest? 

If they borrow 200, and pay back 220, that's 20 over principle, which is 10% of the principal. 

I agree though, dont get him anything, he's not only going against bank rules to loan you $$, but I work for a bank and we have very strict rules (federal rules) about accepting gifts.  If you must get him something, a nice card with a big Thank You in it is the way to go. 

glad you got the $$ you needed though. 

[hollasa]

So he's loaned you $200, but you have to pay back $220 in a month's time? Is that right?

I actually come up with a 204.63 % "annual effective interest rate", using this calculator (that's assuming loan Dec 1st, repayment Jan 1st):
http://www.irrq.com/us/credit.php

more info on annual effective interest rate:
http://en.wikipedia.org/wiki/Annual_percentage_rate

This article on various legal state interest rates may be of interest:
http://www.lectlaw.com/files/ban02.htm

It is nice that you have the money, however, in time for Christmas, but I wouldn't get him a gift.

Sarah

[Secret]

I guess if I were the kind hearted bank worker and you came in and got me a gift, I'd be pretty ticked off actually.  I went out of my way to give you a short term loan because you desperately needed it, and then I see you went and got me, a bank teller you hardly know, a present when I know you're struggling financially?  I'd wonder what else you were wasting money on and would not be inclined to help people out the next time.  If I were going to get a thank you, a card would be a nice touch.

Nothing personal here, but I just have a sensitivity to seeing people who don't have the best financial record blow money.  I see it way too often around me.  This is from personal experience only.  I also know you are getting money in january, but it doesn't change the way I feel.

[ShadesOfGrey]

So he's loaned you $200, but you have to pay back $220 in a month's time? Is that right?

I actually come up with a 204.63 % "annual effective interest rate", using this calculator (that's assuming loan Dec 1st, repayment Jan 1st):
http://www.irrq.com/us/credit.php

more info on annual effective interest rate:
http://en.wikipedia.org/wiki/Annual_percentage_rate

This article on various legal state interest rates may be of interest:
http://www.lectlaw.com/files/ban02.htm

It is nice that you have the money, however, in time for Christmas, but I wouldn't get him a gift.

Sarah

ok- I guess i am assuming this isn't a typical bank loan...I kind of got the idea that this guy was just giving them $$ out of his pocket and stuffing the papers under a rug somewhere... so he's only making $20 on the deal... I've never heard of such a small loan for such a small amount.  Then again, I havent heard of a lot of things...

[MadMadge43]

If they borrow 200, and pay back 220, that's 20 over principle, which is 10% of the principal.

 

To make it easier to understand. Interest is based yearly. So each month you are charged 1/12th of your total interest. So you just have to multiply the 10% she is paying for a one month loan by 12 to get her annual percentage. If the loan had been for two months you would have muliplied the percentage amount by 6.

No need for a fancy calculator 

[ShadesOfGrey]

ok- I guess i am assuming this isn't a typical bank loan...I kind of got the idea that this guy was just giving them $$ out of his pocket and stuffing the papers under a rug somewhere... so he's only making $20 on the deal... I've never heard of such a small loan for such a small amount.  Then again, I havent heard of a lot of things...

thanks.

[hollasa]

If they borrow 200, and pay back 220, that's 20 over principle, which is 10% of the principal.

 

To make it easier to understand. Interest is based yearly. So each month you are charged 1/12th of your total interest. So you just have to multiply the 10% she is paying for a one month loan by 12 to get her annual percentage. If the loan had been for two months you would have muliplied the percentage amount by 6.

No need for a fancy calculator 

Well, not quite - you're missing out on the compounding of the monthly interest.

As per the previously mentioned wikipedia article:
"An effective annual interest rate of 10% can also be expressed in several ways:

    * 0.7974% effective monthly interest rate
    * 9.569% annual interest rate compounded monthly
    * 9.091% annual rate in advance.

These rates are all equivalent, but to a consumer who is not trained in the mathematics of finance, this can be confusing. APR helps to standardize how interest rates are compared, so that a 10% loan is not made to look cheaper by calling it a loan at "9.1% annually in advance"."

[MadMadge43]

If they borrow 200, and pay back 220, that's 20 over principle, which is 10% of the principal.
 

To make it easier to understand. Interest is based yearly. So each month you are charged 1/12th of your total interest. So you just have to multiply the 10% she is paying for a one month loan by 12 to get her annual percentage. If the loan had been for two months you would have muliplied the percentage amount by 6.

No need for a fancy calculator  Smiley

Well, not quite - you're missing out on the compounding of the monthly interest.

As per the previously mentioned wikipedia article:
"An effective annual interest rate of 10% can also be expressed in several ways:

    * 0.7974% effective monthly interest rate
    * 9.569% annual interest rate compounded monthly
    * 9.091% annual rate in advance.

These rates are all equivalent, but to a consumer who is not trained in the mathematics of finance, this can be confusing. APR helps to standardize how interest rates are compared, so that a 10% loan is not made to look cheaper by calling it a loan at "9.1% annually in advance"."

I said to make it easier  .  The compound stuff could made a persons head explode 

[Bijou]

I think the best thank you would be to pay the loan off on time and as agreed, confirming his trust in you.  The world needs more of that guy.

[CosmicPossum]

um, can I ask how you are calculating the 120% interest? 

If they borrow 200, and pay back 220, that's 20 over principle, which is 10% of the principal. 

I agree though, dont get him anything, he's not only going against bank rules to loan you $$, but I work for a bank and we have very strict rules (federal rules) about accepting gifts.  If you must get him something, a nice card with a big Thank You in it is the way to go. 

glad you got the $$ you needed though. 

Quick calculation - $20 for one month = $240 for one year.

$240 / $200 (principal) = 120%