What is IBC #2; Volume of Interest

In my last post I explained in short what Privatized Banking was. I mentioned the power of this strategy and also that we would see this power if we could think like a banker.

Let’s look at the power of VOLUME OF INTEREST in this reading.

Each of us no doubt, has heard the terms rate of return or interest rate. Although the banks and finance companies use this for a reference they really earn a different type of interest, VOLUME.

Volume is found by finding the ratio of principle paid to interest paid. For example let’s look at a mortgage. If a consumer borrowed $200,000 @ 6% on a 30 year note the monthly payments would be $1199. Annually that would be $14,389. The interest portion in the first year would be $11,933. In a ratio problem this would look like this ($11,933 ÷ $14,389 = 82.9%. 82.9% is the Volume of Interest paid that year! What happened to 6%?

Some mistakenly think that the 6% is the average over the life of the loan. Not so! The borrower will pay a total of $431,676 during the 30 years. $231,676 of that is interest. You do the math.

This Volume of interest occurs in any amortized loan written. How would you like to earn 82.9% on a loan rather than pay it? That is just one of the benefits of Privatized Banking.

In my next message I will explain to you the power of Velocity of Money. We are just seeing the tip of the financial iceberg.
In the meantime, if you would like more information regarding Privatized Banking or have any questions regarding how it relates to you feel free to contact me toll free at 866-946-3453 or e-mail at craig@beyourbanker.com