Hubby’s step-nephew asked to borrow 7K for a short time. He offered to pay back something outrageous like 15% in just a couple or three weeks (he’s borrowed before but only once since we’ve been married) and that time he did pay us back what amounted to an outrageous amount of interest if it had been calculated as an annual percentage rate. I didn’t think much about it at that time because 1) I didn’t have anything to do with coming up with the terms, and 2) I could afford to loan out that amount at that time and not worry about it.
Now he’s asking to borrow 7K and I asked for him to sign a promissory note and us meet at a notary public “in case he gets abducted by aliens.” I said let’s sweeten the pot and only ask for 8% interest instead of the 15% he was proposing to pay. I said let’s also make the due date July 3 (that’s 43 days). Then I started thinking this still sounds like an outrageous APR but I don’t know what that APR would be.
On the promissory note I put it as 8% per annum which, over 43 days, by my calculations would come to about $7073 over 43 days?????? I don’t care a huge huge amount if that’s what ends up happening. I’d like to have more but it’s not the interest I care about as much as the principal, and I don’t even think a promissory note that had an outrageous APR would be enforceable.
What WOULD the APR be, of 7000 being loaned out, and 7560 being paid back in 43 days? All the calculators on line are backwards from that kind of calculation. I don’t have time to figure out an APR that would be fair to both of us, adequate for the risk I’m taking, legal and not totally outrageous.
Does anyone understand what I’m asking? what is a reasonable APR to ask and put in a promissory note for a loan covering 43 days, when I sort of do and sort of don’t want to face the risk at this time but I’m willing (with feet kinda dragging) And also, how do I figure what the APR would be of 7560 being paid back in 43 days on a loan of 7000?
Sorry so dumb.