As you may be aware my funding rates are typically 15% every six months; NO COMPOUNDING. A rate you may see from other companies is 3.5 % per month, compounded monthly. Let me show you through a quick illustration how vastly different these two rates can be in terms of accruals.
Case number one, client gets $50,000 of funding. Rate: 3.5 % per month, compounding monthly. At the end of one year he owes $75,000. At the end of two years, $112,500.
Case number two, clients gets the same $50,000. Rate:15% every six months. At the end of year one he owes $65,000. At the end of year two, he owes $80,000. Quite a difference!
We didn't even get to year three....
Moral of the story: Rate is very important!
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