Not All Loans Are Created Equal
Not all loans work like traditional bank financing.
In many informal lending scenarios, the borrower receives a lump sum upfront, pays a fixed monthly fee, and then returns the full principal at the end.
This structure can hide the real interest rate.
What Our Calculator Reveals
Our Real Interest Calculator helps you uncover:
- The implied monthly interest rate
- The total cost of holding borrowed money
- The APR equivalent (annualized)
- Whether a loan is extremely expensive or potentially abusive
Rates above 5% monthly often represent very high-cost lending compared to formal bank loans.
Try it here: Real Interest Calculator
Educational Note: "Drop-to-Drop" Lending
Some regions refer to extremely high informal lending as drop-to-drop lending ("gota a gota").
We provide transparency tools to help people understand the math — not to promote illegal lending.
Financial literacy is the first step toward making informed borrowing decisions.