BTCJam Interest?

[KB5988]

Alright, I've been looking at BTCJam, and even invested a small amount, and this is something that's bugged me.  I can't seem to figure out what type of interest BTCJam uses.  Is it compound or simple, or another type? Is each payments interest based off of what's left of the total amount borrowed?  I'd like to know the whole formula so I can calculate how much I'd make back from the investments that are more than one payment without having to wait until they are funded.

[mjc]

The interest is based off the balance left.

So if they take out a 10 BTC Loan at 10% with payments every 7 days for 28 days.

they'll make four payments.  the interest on the first payment is 10% of the principle.  the interest of payment two is 10% of the principle left at payment twos time. and so on. 

I took a 1 BTC loan, to build reputation, paid 10% per day for 7 days and ended up paying something like 1.48 BTC back.  I found out the hard way how the interest was compounded.

I like the place none the less.  I like loaning there.  if you have a rating of 6 or higher, I"ll consider loaning to you.  If you are tied to the bitcoin-otc and or this forum I'll consider.

[KB5988]

The interest is based off the balance left.

So if they take out a 10 BTC Loan at 10% with payments every 7 days for 28 days.

they'll make four payments.  the interest on the first payment is 10% of the principle.  the interest of payment two is 10% of the principle left at payment twos time. and so on. 

I took a 1 BTC loan, to build reputation, paid 10% per day for 7 days and ended up paying something like 1.48 BTC back.  I found out the hard way how the interest was compounded.

I like the place none the less.  I like loaning there.  if you have a rating of 6 or higher, I"ll consider loaning to you.  If you are tied to the bitcoin-otc and or this forum I'll consider.

Hmm, interesting.  And yeah, that's why I'm trying to get a formula for it.  I'm not looking to borrow, I'm only doing investing there and I like knowing exactly how much I'll get back.  But thank you for the offer.

[scamdetector]

The interest is based off the balance left.

So if they take out a 10 BTC Loan at 10% with payments every 7 days for 28 days.

they'll make four payments.  the interest on the first payment is 10% of the principle.  the interest of payment two is 10% of the principle left at payment twos time. and so on. 

I took a 1 BTC loan, to build reputation, paid 10% per day for 7 days and ended up paying something like 1.48 BTC back.  I found out the hard way how the interest was compounded.

I like the place none the less.  I like loaning there.  if you have a rating of 6 or higher, I"ll consider loaning to you.  If you are tied to the bitcoin-otc and or this forum I'll consider.

what is average interrest of your loans?

[mjc]

I made the mistake of making daily payments at 10%, for a week.  so that loan was about 48% in a week.  Luckily I only took a loan for 1 BTC.

I see many that are 10% a month for 1 to 6 months.  So you're looking at 10% for the one month of something like 50% over 6 months.

What's really good is there is a process of building identity of the borrowers.  This should reduce some of the risk.

The easiest way to figure out the total interest you can earn is to figure out how many payments the loan will make multiply it times the payment amount.  Then subtract the loan request amount.  Divide the result byt he loan request.

Here is a good example, I have a loan I'm looking to get funded that will pay 25% over 6 months or less if I pay it off sooner.

https://btcjam.com/listings/898

Here is the break down
Total loaned : 30
Total Paid Back is : 37.598096
That is 25% growth over 180 days.

Total Interest rate = (37.598096 - 30) / 30

[mjc]

Bump...

I'm interested to hear if anyone else is using this site?

[onpdm]

Looks like an very nice idea, but is this really reliable? An Brasil organisation ... and what is, if someone won't pay? Hmm

[XxionxX]

I want to know how secure their website is (This is a good thread but it is all just forum talk, nothing to back up the claims). I would love to invest more and create a good reputation so I can get a larger loan/credit score, but I would be afraid to take a large loan considering they have: no blog, Facebook, no two factor authentication, no guarantees about your money sitting on their site, and they don't have any pictures of their team :/

I am comfortable with small loans which I can stand to lose the funds, but I can't cover large loan loss due to a website security issue. I don't mind accepting a p2p risk factor because they do a good job of showing how much risk you are taking. But it really unnerves me that they don't seem to want to identify themselves or back up their possession of your funds in some manner  

From their website:

Thank you for your interest in BTCJAM.

BTCJAM is owned by Ovo Cósmico LTDA.

Federal Registration no: 10.370.477/0001-12 (check it here)

Which is good, but I still have doubts.

Not that I dislike the idea/site, but I would like to feel secure in my use of the site. I would also like to add this to my list of 'cool stuff to do with bitcoins' which I can tell friends/family about, but I don't feel comfortable doing that atm. Looks promising though!

Edit: Btw, I loaned 2btc to a trustworthy person with 20 repaid loans at ~10btc a piece. So we shall see how this goes I am hopeful though. My investment is under the same username as here on bitcointalk if you look at the investments list.

[maddog0000]

This site looks pretty good, The interest rates are high but it seems legit. I am opening a loan for more mining power soon so I'll post a review later.

[Simon8x]

This site looks pretty good, The interest rates are high but it seems legit. I am opening a loan for more mining power soon so I'll post a review later.

The site itself is legit, but there are quite a number of scammers over there.
Borrowing money there is alright, but you need to be careful lending your money.

[madbtc]

Here is the formula for how BTCJam calculates interest.

A posting advertises:
Amount/Monthly Interest Rate: ฿5.0 @ 3.0%
Term: 180 days

r (monthly interest rate) = 3.0%/100 = 0.03
N (number of payments) = Our Term of 180 days/30 days in a month = 6
P (principle/loan amount) = 5.0 BTC

The size of each payment is c, where c = (P*r*(1+r)^N) / ((1+r)^N-1) = 0.9229875 BTC
Total BTC paid back over 180 days = T = N*c = 6*0.9229875 = 5.537925 BTC
Percentage gained over Term = (T/P - 1)*100 = 10.7585%
APR = Percentage gained * A year in days / Term in days = 10.7585% * 365 / 180 = 21.81585%