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The Pwn Shop, a new service available for instant loans
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Bunyip
Center for Advanced Studies
Gallente Federation
#1 - 2013-10-02 17:49:59 UTC
Hello all,

I figured I'd post this here as well as the Sell Orders forum for anybody interested, since most loan contracts go through the MD forum. If you're interested in a short-term, low-value loan, just read ahead.

I am starting a new service for capsuleers called The Pwn Shop. Do you really want that new ship or implant or other item, but don't have the funds available to purchase it? Well, I'm here to help you get the item you need immediately!

This works like a normal pawn shop, in that you contact me to arrange the negotiations. Thereafter, you transfer goods worth 10% more than the loan amount as collateral (determined by highest reasonable Jita buy price) to me and I transfer you the funds to purchase what you need immediately.

I expect a lot of low-value loans, so the interest starts at 3% immediately and then compounds 1% every two days until the loan is paid off. If the loan hasn't been paid off in 2 weeks, the collateral is forfeit to me unless arrangements have been made and agreed upon. All trades will take place at Jita 4-4: CNAP, to allow for easier access to the items you wish to purchase.

I currently have over 1.3b of liquid assets, and will be gaining more as my items sell. If you are interested in a loan, contact me either via evemail or by replying in this thread. I'll do the best I can to get to you as soon as possible and get you the funds needed.

I have had over 10 years in this game, and even sat on the 2nd term of the CSM council. I have more interest in maintaining the good standing of my name than taking advantage of anybody for what is really a petty amount. Contact me, and we'll talk numbers.

- Bunyip
Xurr
Wasted Potential.
#2 - 2013-10-02 18:51:22 UTC
So let me see if I've got this right.

They send you their items then you send them the cash?


Oh and something about cross posting...
Vaerah Vahrokha
Vahrokh Consulting
#3 - 2013-10-02 18:53:01 UTC
Bunyip wrote:
Hello all,

I figured I'd post this here as well as the Sell Orders forum for anybody interested, since most loan contracts go through the MD forum. If you're interested in a short-term, low-value loan, just read ahead.

I am starting a new service for capsuleers called The Pwn Shop. Do you really want that new ship or implant or other item, but don't have the funds available to purchase it? Well, I'm here to help you get the item you need immediately!

This works like a normal pawn shop, in that you contact me to arrange the negotiations. Thereafter, you transfer goods worth 10% more than the loan amount as collateral (determined by highest reasonable Jita buy price) to me and I transfer you the funds to purchase what you need immediately.

I expect a lot of low-value loans, so the interest starts at 3% immediately and then compounds 1% every two days until the loan is paid off. If the loan hasn't been paid off in 2 weeks, the collateral is forfeit to me unless arrangements have been made and agreed upon. All trades will take place at Jita 4-4: CNAP, to allow for easier access to the items you wish to purchase.

I currently have over 1.3b of liquid assets, and will be gaining more as my items sell. If you are interested in a loan, contact me either via evemail or by replying in this thread. I'll do the best I can to get to you as soon as possible and get you the funds needed.

I have had over 10 years in this game, and even sat on the 2nd term of the CSM council. I have more interest in maintaining the good standing of my name than taking advantage of anybody for what is really a petty amount. Contact me, and we'll talk numbers.

- Bunyip


When I was still new and sitting in rookie chat, the ISDs linked all day long your bio where we would find all good beginner info. *Tips hat*

EvE Online portal | EvE markets tutorials
Bunyip
Center for Advanced Studies
Gallente Federation
#4 - 2013-10-02 19:08:28 UTC
Xurr wrote:
So let me see if I've got this right.

They send you their items then you send them the cash?


No, the exchange is done immediately, as a direct trade. They get the money as they give me the items. I hold them, then once they have notified me that they have the full amount available, I transfer the items back to them in the same way.

This is the only method I can think of to be totally fair and instantaneous. If the client requests, we can do a contract. This is just an idea I came up with, and it seems to be a unique offering in the game (so far as I'm aware).
Tigerras
Smash Incorporated
#5 - 2013-10-02 19:12:00 UTC
I love this idea, I really do, but are you sure you want to limit it to 2 weeks? You're only getting like a 10% interest rate then.

My math:
Initial value: 1.03 (after initial interest)
1.0403 (compounding ever 2 days at 1%)
1.050703
1.06121003
1.07182213
1.082540352
1.093365755
1.104299413
1.115342407
1.126495831
1.137760789
1.149138397
1.160629781
1.172236079
1.18395844
1.195798024

so after 1 month, they are charged an effective rate of 19.58% interest. After 2 months, it is 38.82%, 3 months 61%

Up that initial interest bit to 5%, and you get even more fun rates. 12.5% at your two week mark, 22% at one month. 2% every 2 days is fun as well (but now we are getting mean).
Tigerras
Smash Incorporated
#6 - 2013-10-02 19:12:58 UTC
Bunyip wrote:
Xurr wrote:
So let me see if I've got this right.

They send you their items then you send them the cash?


No, the exchange is done immediately, as a direct trade. They get the money as they give me the items. I hold them, then once they have notified me that they have the full amount available, I transfer the items back to them in the same way.

This is the only method I can think of to be totally fair and instantaneous. If the client requests, we can do a contract. This is just an idea I came up with, and it seems to be a unique offering in the game (so far as I'm aware).



Well, it might be unique currently, but one of these crops up every few months. Every 6 months tops.
Bunyip
Center for Advanced Studies
Gallente Federation
#7 - 2013-10-02 19:34:33 UTC
Tigerras wrote:
I love this idea, I really do, but are you sure you want to limit it to 2 weeks? You're only getting like a 10% interest rate then.

so after 1 month, they are charged an effective rate of 19.58% interest. After 2 months, it is 38.82%, 3 months 61%

Up that initial interest bit to 5%, and you get even more fun rates. 12.5% at your two week mark, 22% at one month. 2% every 2 days is fun as well (but now we are getting mean).


This is meant to be a short-term, fluid loan. If the person cannot pay the full amount, they can work with me to extend the time allotted. I expect that this will usually consist of "I need that 100m for the battleship" rather than the larger loans that this forum is known for.

I can make more money off of longer-term loans, but I'm doing this more of as a service rather than a get-rich-quick scheme. I want to help others out, and maybe make a bit off of it, but not tie up my funds for an extended period.
Tigerras
Smash Incorporated
#8 - 2013-10-02 19:52:43 UTC  |  Edited by: Tigerras
Hrm, Wonder if something like this would work with a payment plan option. Keep the interest lowish, but compounding regularly, and let people pay towards it. Like a car or student loan.

Might be too much paperwork to be worthwhile, but keep charging them interest and don't release their collateral until they pay it off. Could make a lot more money that way too.

Problem with compounding too much interest is that your overall profit is bound by the value of your collateral. If the cost of the loan exceeds the value of the collateral, then the person will most likely say **** it and not repay, letting you sell the collateral.
Bunyip
Center for Advanced Studies
Gallente Federation
#9 - 2013-10-02 19:56:48 UTC
Tigerras wrote:
Hrm, Wonder if something like this would work with a payment plan option. Keep the interest lowish, but compounding regularly, and let people pay towards it. Like a car or student loan.

Might be too much paperwork to be worthwhile, but keep charging them interest and don't release their collateral until they pay it off. Could make a lot more money that way too.

Problem with compounding too much interest is that your overall profit is bound by the value of your collateral. If the cost of the loan exceeds the value of the collateral, then the person will most likely say **** it and not repay, letting you sell the collateral.


That would work if there was such a thing as a credit rating in this game. However, due to how cheap life is in this game (biomass) and how quickly the payments would defeat the value of the collateral (to the point where they see no need to keep paying the interest and rather yield the collateral), I don't see that concept working.

Not saying it's a bad idea - it's a great idea. However, I don't think the mechanics of this game allow for that to work smoothly.
Tigerras
Smash Incorporated
#10 - 2013-10-02 19:59:24 UTC
Bunyip wrote:
Tigerras wrote:
Hrm, Wonder if something like this would work with a payment plan option. Keep the interest lowish, but compounding regularly, and let people pay towards it. Like a car or student loan.

Might be too much paperwork to be worthwhile, but keep charging them interest and don't release their collateral until they pay it off. Could make a lot more money that way too.

Problem with compounding too much interest is that your overall profit is bound by the value of your collateral. If the cost of the loan exceeds the value of the collateral, then the person will most likely say **** it and not repay, letting you sell the collateral.


That would work if there was such a thing as a credit rating in this game. However, due to how cheap life is in this game (biomass) and how quickly the payments would defeat the value of the collateral (to the point where they see no need to keep paying the interest and rather yield the collateral), I don't see that concept working.

Not saying it's a bad idea - it's a great idea. However, I don't think the mechanics of this game allow for that to work smoothly.



If you have the collateral, and it is worth at least the loan + small profit margin, then any payments they make to you in the meantime, are profit if they yield the collateral. It actually works better than RL.
Bunyip
Center for Advanced Studies
Gallente Federation
#11 - 2013-10-02 20:05:13 UTC
Tigerras wrote:
If you have the collateral, and it is worth at least the loan + small profit margin, then any payments they make to you in the meantime, are profit if they yield the collateral. It actually works better than RL.


And how would you handle defaults to the loan value. Trust is way too valuable and rare a commodity in this game to support that.
Tigerras
Smash Incorporated
#12 - 2013-10-02 20:15:35 UTC
Bunyip wrote:
Tigerras wrote:
If you have the collateral, and it is worth at least the loan + small profit margin, then any payments they make to you in the meantime, are profit if they yield the collateral. It actually works better than RL.


And how would you handle defaults to the loan value. Trust is way too valuable and rare a commodity in this game to support that.



Not sure I understand. Borrowers would go in knowing they forfeit their collateral under certain circumstances, but they have the option to make payments towards the loan to reduce the overall interest owed.

So say I borrow 500m for something, giving up a ship worth 550m as collateral. My interest rate is 3% initially and 1% every other day, and I plan on paying it back after 14 days on day 15, which means the total value of the loan is 552m (rounded for convenience).

If I payed off at day 7 instead, I'd owe 530m. But let's say I don't have that yet, so I pay 50m, which I do have reducing the loan to 480m (paying 30m of interest and 20m of principal).

Now, if I continue and pay off at day 15, I owe 499m (again rounded) plus the 50m I paid is 549m. Meaning I saved 3m, or 0.6% of the loans total value. (gets a lot better with more payments and a longer period)

Now, assuming the guy defaulted on day 15, I now can sell a ship worth 550m, and have a 50m payment in my pocket.
Bunyip
Center for Advanced Studies
Gallente Federation
#13 - 2013-10-02 20:28:23 UTC
Tigerras wrote:
Not sure I understand. Borrowers would go in knowing they forfeit their collateral under certain circumstances, but they have the option to make payments towards the loan to reduce the overall interest owed.

So say I borrow 500m for something, giving up a ship worth 550m as collateral. My interest rate is 3% initially and 1% every other day, and I plan on paying it back after 14 days on day 15, which means the total value of the loan is 552m (rounded for convenience).

If I payed off at day 7 instead, I'd owe 530m. But let's say I don't have that yet, so I pay 50m, which I do have reducing the loan to 480m (paying 30m of interest and 20m of principal).

Now, if I continue and pay off at day 15, I owe 499m (again rounded) plus the 50m I paid is 549m. Meaning I saved 3m, or 0.6% of the loans total value. (gets a lot better with more payments and a longer period)

Now, assuming the guy defaulted on day 15, I now can sell a ship worth 550m, and have a 50m payment in my pocket.


That mechanic might work, and I'd love to see it. IMHO, even with collateral and such, the credit rating is the only thing that keeps people making payments.

I would recommend boosting the difference to 20% just to ensure the value is paid, as a sudden market flux could devalue the collateral too far at only 10% value added over an extended period.

Also, having a mechanic to limit loan amounts that's well demonstrated (such as 100m per 3 months in the game or so) would be a good idea to avoid the appearance of favoritism.
Tigerras
Smash Incorporated
#14 - 2013-10-02 20:34:22 UTC
Bunyip wrote:
Tigerras wrote:
Not sure I understand. Borrowers would go in knowing they forfeit their collateral under certain circumstances, but they have the option to make payments towards the loan to reduce the overall interest owed.

So say I borrow 500m for something, giving up a ship worth 550m as collateral. My interest rate is 3% initially and 1% every other day, and I plan on paying it back after 14 days on day 15, which means the total value of the loan is 552m (rounded for convenience).

If I payed off at day 7 instead, I'd owe 530m. But let's say I don't have that yet, so I pay 50m, which I do have reducing the loan to 480m (paying 30m of interest and 20m of principal).

Now, if I continue and pay off at day 15, I owe 499m (again rounded) plus the 50m I paid is 549m. Meaning I saved 3m, or 0.6% of the loans total value. (gets a lot better with more payments and a longer period)

Now, assuming the guy defaulted on day 15, I now can sell a ship worth 550m, and have a 50m payment in my pocket.


That mechanic might work, and I'd love to see it. IMHO, even with collateral and such, the credit rating is the only thing that keeps people making payments.

I would recommend boosting the difference to 20% just to ensure the value is paid, as a sudden market flux could devalue the collateral too far at only 10% value added over an extended period.

Also, having a mechanic to limit loan amounts that's well demonstrated (such as 100m per 3 months in the game or so) would be a good idea to avoid the appearance of favoritism.



I'd have to do real number crunching on it to make a business plan out of it (and have about 5bn more on hand than I have to make it viable without making myself poor), but I think it could work. I also think that it would have a higher default rate, and therefore a higher profit for the lender (even in the case of people paying off early, you are always getting your principal back plus interest, and have more to lend if they pay early).

Banks IRL have a harder time with this even with credit rating. Cars and houses lose value, and you can always trash your place, and steal all the copper wire and anything else valuable from it before the bank forecloses. Hard to strip the copper wire out of a CNR sitting in my hangar.
Bunyip
Center for Advanced Studies
Gallente Federation
#15 - 2013-10-02 20:41:48 UTC
Tigerras wrote:
I'd have to do real number crunching on it to make a business plan out of it (and have about 5bn more on hand than I have to make it viable without making myself poor), but I think it could work. I also think that it would have a higher default rate, and therefore a higher profit for the lender (even in the case of people paying off early, you are always getting your principal back plus interest, and have more to lend if they pay early).

Banks IRL have a harder time with this even with credit rating. Cars and houses lose value, and you can always trash your place, and steal all the copper wire and anything else valuable from it before the bank forecloses. Hard to strip the copper wire out of a CNR sitting in my hangar.


Ah, a junk loans system....it'd be hard to balance, but it sounds like a good system to try to put into place. Junk loans are a lucrative market, since there is so much profit to be made, even financing to people with hideous credit ratings.
Tigerras
Smash Incorporated
#16 - 2013-10-02 20:51:35 UTC
Bunyip wrote:
Ah, a junk loans system....it'd be hard to balance, but it sounds like a good system to try to put into place. Junk loans are a lucrative market, since there is so much profit to be made, even financing to people with hideous credit ratings.


Which is why payday loan companies charge 25%, and stay in business. Good thing I sold my soul years ago.