Episode 81: The Hidden Math That Makes a 12% Loan Actually Cost 17.5%

Think a 12 percent loan really costs 12 percent? Think again. On paper, the numbers might look simple, but the way money moves tells a different story. The timing of payments, upfront points, and how interest is collected can quietly change your true rate of return or cost of borrowing. What happens when the math behind a 12 percent loan adds up to something much higher?In this episode, Rich Lennon breaks down the hidden rate loan structures and how timing, points, and payment collection can dramatically affect yield. He walks through how to understand your true rate of return and spot when lenders are tweaking the numbers. With the right knowledge and transparency, you can gain a real advantage in the lending world. You’ll Learn How To:Spot how loan terms like prepaid interest and points change true ROICalculate the internal rate of return (IRR) versus the stated annual interestAvoid being misled by “lower” advertised ratesUse transparency as a competitive edge in lending dealsEducate clients to build trust and long-term business Who This Episode Is For:Private lenders who want to understand real returns on their loansReal estate investors are comparing lending options and hidden costsBorrowers seeking to avoid surprise fees and inflated interest ratesAnyone who wants to make smarter lending and borrowing decisionsWhy You Should Listen:Behind every loan lies a story told by numbers. Rich Lennon shows how a few shifts in structure can raise a 12 percent loan to a 17.5 percent cost, and how knowing the math gives you the power to negotiate smarter, earn more, and lend with confidence.What You’ll Learn in This Episode:[00:00] Greetings from Orlando and the value of education[01:00] How payment timing and points affect loan returns[02:00] The risks of skipping payments and losing compounding[04:00] What makes a 12% loan effectively cost 17.5%[06:00] How educating clients reveals the true cost of borrowing[08:00] The impact of transparency on trust and repeat businessFollow Rich Lennon here:Website: https://richlennon.com/ Facebook: https://www.facebook.com/rich.lennon.121 Instagram: https://www.instagram.com/richlennon92/