Loan sharking?
 

I believe in Canada any interest above 40 or 60% (can't remember which) is considered loan sharking which is illegal.

Here's my question now;

Say you borrow $1,000, with an interest of 15% per month on it. That's $150 per month to payout, totalling $1800 annually received from interest.

Wouldn't that be considered an interest rate of 180%?

Matt

I believe you can get around the law by making it a 30 day loan that is due in full at the end of the month that then rolls over into a new 30 day loan the following month. Essentially you could just pay the $150/mo. forever and still owe the $1000. I'm sure it varies by juristiction but in FL this was common practice on car title loans.

The interest rate is based on the loan term - to a max of per annum. ie:

15% interest - 6 month term would be 2.5% monthly interest.
15% interest - on a 3 year loan, would be 15%/annum, not over the 3 year term (unless you got a really kind loan officer)

If someone is charging you the full interest rate every month, then you have a loan shark on your hand.

Well, thank you for all the information everyone. :)

Matt