this post was submitted on 04 Apr 2024
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The idea is to avoid the expense spiraling out of control due to exponential growth.
In order to motivate your business partner, you should have a contract that defines the price of the stocks in a favorable way. It’s like buying and selling really. The lender pays 4300 € for the car, and sells it at a higher price, such as 4600 €.
Oh, if you're trying to prevent usury, it would be far simpler to either cap interest rates or ban compound interest in favor of simple interest.
Rate caps are the simplest solution least likely to backfire, but unfortunately they tend to push people away from legitimate sources of lending, so you do have to be careful that they aren't too low.
Like I said, forming a corporation isn't a simple thing, doing it to organize a personal loan would take up an enormous amount of time and money, and result in substantially fewer consumer protections.
Well, now that taking a loan is fast and easy, people tend to spend the money they don’t have and buy the things they can’t afford. Having some sort of a speed bump along the way should make people think a little more and avoid getting into unnecessary debt.
I agree, but forming a corp is time consuming in an expensive way, you need (usually) retain lawyers and an accounting firm.
I think it would be better if getting credit were subject to income and asset verification, and most importantly that the government make sure eligibility verification is not abusive, discriminatory, or inconsistent in nature.