You may have heard of meter byaj. Here's how it's calculated:
Meter loans are a type of short-term loan where the lenders may choose to express the interest rate on a daily, weekly, or monthly basis, depending on their preferred method of calculation.
If someone takes out a loan of Rs 100,000 with a monthly interest rate of 3%, they will be required to pay Rs 3,000 in interest.
If the borrower does not pay the interest for a year, the total amount owed for the meter byaj will be Rs 36,000 (12 x 3,000), which equates to a 36% annual interest rate. This would be added to the original loan amount of Rs 100,000, making the total amount to be paid Rs 136,000.
While banks only charge an annual interest rate of 15%-18%. However, they do not make loans available to the general public in this manner. There is a lot of paperwork and collateral that must be shown, so the average person cannot get a loan when they are in need.
Again as per meter byaj, if the borrower still does not pay, the interest would continue to compound on the new principal amount of Rs 136,000. Assuming the borrower does not make any payments towards the loan, the interest for the next year would be calculated on the new principal amount of Rs 136,000 at the rate of 36% per annum, which would be Rs 48,960 (36% of 136,000).
The advantage of a meter loan is that it provides short-term financing for those who need it quickly. However, the interest rates on these types of loans can get high, and borrowers should carefully consider the terms and conditions before taking out a meter loan.
