# Overstating Interest Rates?

I'm fact checking my analysis, so there's only one possible answer in that I'm either right or way out in left field (wrong).

A friend of mine mentioned this bitcoin lending site and I looked at it to see if the returns they're promising are correct. When I look at this loan for this question's purpose, I see that it offers a 19.47% return (this is how their interest rates are calculated). What I see is that the borrower borrowed 3 BTC and paid back the 2.99998200 BTC plus 0.37685100 in interest. That is a 12.561775% return, not 19.47%, based on my math and this is a one-year loan (they adjust when it's less than a year).

Now, it's possible that the user paid some early, which would have reduce his later payments, but I haven't heard back from the company when I asked them about this several weeks ago, so I wanted to fact check the math I'm doing because I'm getting a ~7% miss. Thanks!

• It's because he paid it back in monthly installments. For this you have to use the annuity formula + balloon payment. en.wikipedia.org/wiki/Annuity – meh Aug 7 '15 at 16:19
• @MatthewEr Thanks Matthew; so that does mean then that the investor didn't get the 19.47% APR return; the actual return was lower because he paid it back in monthly installments. – user541852587 Aug 7 '15 at 16:33
• No the rate of 19.47% is correct. – meh Aug 7 '15 at 17:13