Redcaps, Vis exchange rate and Vis loans

[Gareth_Lazelle]

Quick question for you all,

There seems to be something a bit iffy with the Vis exchange rates when compared with Vis loans as printed in the Redcap/Mercere section of True Lineages,

Vis exchanges (ignoring the vf/vt issue for a moment) incur a charge equal to 100% of the principle sum (i.e.: I need to pay 2 vf to exchange for 1 vf in a different art),

Loans however incur a charge equal to (IIRC) 20% of the principle sum per year (compound I am guessing, though it doesn't say), and are specifically noted as often being paid back with Vis of a different art (indeed, this is noted as being mandatory in some areas to avoid charges of usury - though possibly the vf/vt exchange rate would also apply here),

So hypothetically if I want to exchange my Ignem Vis for 10 pawns of Corpus Vis, I could either:

1/ Front up 20 pawns of Ignem in exchange for 10 Corpus or,
2/ Borrow 10 Corpus Vis on a promise to repay 12 pawns of Ignem within the year, and the option to extend the repayment further in exchange for additional Vis,

So - my point is, there seems to be something off with the charges - either the loans are too cheap, or the exchanges are too expensive, as on the face of it the loans are cheaper, more flexible and don't require any immediate Vis,

If exchanges incurred a cost of perhaps 10% (rounding up), then there is more balance with loans? The alternative (interest of 100%+ pa for loans) seems somehow less likely... (though they no doubt exist in some circles),

I guess that the other alternative is for the repayment of the loan to incur the exchange charge as well as interest (i.e.: the loan is effectively doubled as soon as it is taken out), which also seems extreme,

Any thoughts?

[Tugdual]

@Gareth_Lazelle

2/ Borrow 10 Corpus Vis on a promise to repay 12 pawns of Ignem within the year, and the option to extend the repayment further in exchange for additional Vis,

Any thoughts?

That should be:
3/ Borrow 10 Corpus Vis on a promise to repay 10 Corpus Vis and 2 pawns of Ignem within the year, and the option to extend the repayment further in exchange for additional Vis,

[Gareth_Lazelle]

@Tugdual

@Gareth_Lazelle

2/ Borrow 10 Corpus Vis on a promise to repay 12 pawns of Ignem within the year, and the option to extend the repayment further in exchange for additional Vis,

Any thoughts?

That should be:
3/ Borrow 10 Corpus Vis on a promise to repay 10 Corpus Vis and 2 pawns of Ignem within the year, and the option to extend the repayment further in exchange for additional Vis,

If you did that it would be obvious what the "interest" was on the loan (2 Ignem), and charges of usury could be brought against the lender,

p85 of TL says the following:

Christian Moneylenders can sometimes get around this by negotiating payment in a different currency, so that it is not entirely clear what is profit from the loan, and what is profit from the exchange. For this reason, Redcaps might loan one form of Vis, but require payment in another.

It isn't just the "fee" repaid in a different currency, but the whole loan (otherwise no exchange of currencies takes place to incur a charge for such).

That said, I seem from re-reading the text that both need to incur charges otherwise it would still be clear what the "interest" was - so I guess when negotiating Vis loans it pays to try and repay in the same currency,

[Tugdual]

@Gareth_Lazelle

@Tugdual

@Gareth_Lazelle

2/ Borrow 10 Corpus Vis on a promise to repay 12 pawns of Ignem within the year, and the option to extend the repayment further in exchange for additional Vis,

Any thoughts?

That should be:
3/ Borrow 10 Corpus Vis on a promise to repay 10 Corpus Vis and 2 pawns of Ignem within the year, and the option to extend the repayment further in exchange for additional Vis,

If you did that it would be obvious what the "interest" was on the loan (2 Ignem), and charges of usury could be brought against the lender.

You are wondering why (2) is such a better deal than (1). I am explaining that no Redcap will offer (2), but use (3) as the baseline of their offer. There's no way they'll make you a better deal than (1), usury or not.

[Halancar]

My guess is that if you want to borrow Corpus vis and repay in Ignem, you'll have to pay both the interest rate and the different vis fee; so it would be a loan of 10 Corpus, repayable as either 22 or 24 Ignem, depending on your negotiating skills. Magi are not stupid, if your (2) was even an option, no one would take the (1).

That said, for such a large loan/exchange, you should be able to negotiate a slight discount.