Interest rates... why?

drSix

Silver
Oct 13, 2013
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Just curious, but why are interest rates on auto loans and mortgages sooo high. Ridiculously high! You'll never see me financing anything. I'll either pay cash, or go without.

Are the interest rates regulated by a central bank, or the government? Or is it just the Dominican way of 'money today', I'll worry about tomorrow, tomorrow.

I mean really, an investor could come here with a couple million bucks and make a killing borrowing to people at 7% APR.

I just don't get it.
 

the gorgon

Platinum
Sep 16, 2010
33,997
83
0
Just curious, but why are interest rates on auto loans and mortgages sooo high. Ridiculously high! You'll never see me financing anything. I'll either pay cash, or go without.

Are the interest rates regulated by a central bank, or the government? Or is it just the Dominican way of 'money today', I'll worry about tomorrow, tomorrow.

I mean really, an investor could come here with a couple million bucks and make a killing borrowing to people at 7% APR.

I just don't get it.

lending at 7 would not be the problem. getting repaid would be. what do you do when you are a foreigner and some local refuses to pay up? yes, i know..you hold his house title as collateral. then he looks to blow you away.
 

gandolf50

New member
Apr 17, 2011
157
0
0
lending at 7 would not be the problem. getting repaid would be. what do you do when you are a foreigner and some local refuses to pay up? yes, i know..you hold his house title as collateral. then he looks to blow you away.

Or they never sell the house, they just pass on down through the family. If you had a "embargo" on a property you would most likely never collect.
 

tommeyers

On Vacation!
Jan 2, 2012
1,599
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I live in Santiago
The interest rates for lending to people is more like 150% Apr. The difficulty in collecting explains part of that.

A friend of mine borrowed 10,000 pesos and pays 1,000 pesos per month in just interest.
 

mido

Bronze
May 18, 2002
1,522
14
38
Just curious, but why are interest rates on auto loans and mortgages sooo high. Ridiculously high! You'll never see me financing anything. I'll either pay cash, or go without.

Are the interest rates regulated by a central bank, or the government? Or is it just the Dominican way of 'money today', I'll worry about tomorrow, tomorrow.

I mean really, an investor could come here with a couple million bucks and make a killing borrowing to people at 7% APR.

I just don't get it.
Lending money is a high risk for banks considering the monetary situation in DR. E.G. exchange rate changes unexpectedly, inflation is difficult to predict, etc.
 

dv8

Gold
Sep 27, 2006
31,266
363
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lending money is a simple business. you need to recuperate as much as you can, as soon as possible. many do not have much to put as a collateral, their collateral is a high interest rate, in a way.

sankie husband of a friend of mind recently bought a car. worth 500k pesos. he paid 40k down and the rest is split into 10 years worth of 18k a month. you will note that in 10 years it makes whooping 2.160.000 pesos. that's how you make money. or lose money.
 

dv8

Gold
Sep 27, 2006
31,266
363
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I thought that interest rates on cars were at 9 to 13 percent.. which is within range of car loans in the States for not so good credit. Or do I have my figures wrong?

if you are talking about the sankie from my post he took a credit from prestamista as no bank would lend him as much as 10 pesos.

as far as the banks are concerned their rates are not very high but the process of obtaining money is not that easy.
 

Criss Colon

Platinum
Jan 2, 2002
21,843
191
0
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yahoomail.com
YES, "MA" you ARE WRONG!!!
VERY WRONG"!!!!!!!
Lots of new cars available in the USA with 5 or even 6 years of financing at 0% APR.
Those 12 & 13 % rates here are "Teaser Rates" good only for 6 months to a year, then, ...."Look OUT"!!!!
CCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC
 

drSix

Silver
Oct 13, 2013
1,323
0
36
So, the DR doesn't lend money to make money AND boost the economy or sales? They lend money to make money, that is it.

It is really kinda sad. I would buy a new car, if financing were reasonable. There are probably a lot of people out there like me, I wonder if they realize that! Although, I sure do see a lot of nice new cars on the road. I've said it before, I own the oldest junkiest car in the Campo.
 

arturo

Bronze
Mar 14, 2002
1,336
97
48
credit

Using consumer credit here is financial suicide, plain and simple. The terms are grossly unfair. You are conducting your affairs wisely.


So, the DR doesn't lend money to make money AND boost the economy or sales? They lend money to make money, that is it.

It is really kinda sad. I would buy a new car, if financing were reasonable. There are probably a lot of people out there like me, I wonder if they realize that! Although, I sure do see a lot of nice new cars on the road. I've said it before, I own the oldest junkiest car in the Campo.
 

drSix

Silver
Oct 13, 2013
1,323
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36
It's a cycle though. If interest rates weren't so damn high, people could pay back the loan! amirite?
 

dv8

Gold
Sep 27, 2006
31,266
363
0
It's a cycle though. If interest rates weren't so damn high, people could pay back the loan! amirite?

no. it's not that people cannot pay back, it's that they cannot take regular loans because they are not employed legally and have nothing of value that can be put as a collateral except of whatever it is they are borrowing money for.
 

drSix

Silver
Oct 13, 2013
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36
I just can't figure it out. I go to supercarros or emarket and see ridiculously expensive jet ski's, atvs, and cars. Not just overpriced, but soooo inflated that I think it must be a joke. As so many. So many brand new $30,000 toys and $70,000 SUVs! Who's buying this stuff. Are there really that many people on this island dropping that kind of money?
 

windeguy

Platinum
Jul 10, 2004
42,211
5,966
113
It's a cycle though. If interest rates weren't so damn high, people could pay back the loan! amirite?

Not really. People with little or no income that buy items they cannot afford are unlikely to pay back the loan.
 

windeguy

Platinum
Jul 10, 2004
42,211
5,966
113
I just can't figure it out. I go to supercarros or emarket and see ridiculously expensive jet ski's, atvs, and cars. Not just overpriced, but soooo inflated that I think it must be a joke. As so many. So many brand new $30,000 toys and $70,000 SUVs! Who's buying this stuff. Are there really that many people on this island dropping that kind of money?

Only if they can come up with cash to pay for it. Most motor vehicles are 40% higher in cost than in the US. For that you can primarily blame the government on how they tax such imports. It is a sad reality and not a joke for those of us living here.
 

JayinRD

Member
Apr 18, 2013
411
11
18
I just can't figure it out. I go to supercarros or emarket and see ridiculously expensive jet ski's, atvs, and cars. Not just overpriced, but soooo inflated that I think it must be a joke. As so many. So many brand new $30,000 toys and $70,000 SUVs! Who's buying this stuff. Are there really that many people on this island dropping that kind of money?

They buy their unnecessary gas guzzling tanks with every last peso they have or can borrow. Savings rate in this country for anybody other than the 1%ers is probably 0.
 

dv8

Gold
Sep 27, 2006
31,266
363
0
I just can't figure it out. I go to supercarros or emarket and see ridiculously expensive jet ski's, atvs, and cars. Not just overpriced, but soooo inflated that I think it must be a joke. As so many. So many brand new $30,000 toys and $70,000 SUVs! Who's buying this stuff. Are there really that many people on this island dropping that kind of money?

well, many people buy a car they cannot afford. hence so many offers on supercarros. idiots take credits to buy and then cannot pay it off and try to sell. at inflated value, of course. many can afford those cars and more.
also, bear in mind that those who can afford to buy nice, expensive, brand new car pay for it less than idiots who take credit for their over the top ride. ricos may be buying a new car every year or every two years. often they will pay half of the price in cash and another half within 3 or 6 months. at zero interest. because the seller knows they will come back time and again. a fool who takes credit for his car will end up paying a lot more because of the interest rate.