{"id":69153,"date":"2016-08-18T13:54:07","date_gmt":"2016-08-18T11:54:07","guid":{"rendered":"https:\/\/tcm.be\/glossarium\/interests-on-debts\/"},"modified":"2026-01-14T22:56:06","modified_gmt":"2026-01-14T21:56:06","slug":"interests-on-debts","status":"publish","type":"glossarium","link":"https:\/\/tcm.be\/en\/glossarium-en\/interests-on-debts\/","title":{"rendered":"Interests on debts"},"content":{"rendered":"\n<p><strong>Why pay interests on debts?<\/strong><\/p>\n\n\n\n<p>When you borrow something (tool, car, house), you pay rent to compensate the owner for not having the usage of the item.&nbsp; When the item is money, the rent is called interests.<\/p>\n\n\n\n<p><strong>How are interests computed?<\/strong><\/p>\n\n\n\n<p>Interests are a percentage of the loan amount.&nbsp; It is a function of the duration of the loan. Where a rent is usually expressed in months, the interest rate is generally stated on a yearly basis.&nbsp; Example: 100 EUR at 12% yearly interest for 6 months costs 100 * 12% (yearly) \/ 2 (half a year) = 6 EUR.<\/p>\n\n\n\n<p><strong>Does a creditor get rich with interests paid on debts?<\/strong><\/p>\n\n\n\n<p>During the sales process, the seller and the buyer agree upon an ultimate date of payment (for instance 30 days).&nbsp; The creditor has already invested money to produce this item or service.&nbsp; He will reinvest the price paid into producing new products or services.&nbsp; Should he not be paid on time, he will need to find money elsewhere. This means that he\u2019ll need to get a loan, which will entail a cost (even the company capital is a kind of loan that needs to be paid for). But there is a limit to the amount of money that a company can borrow. And what is allocated to compensate unpaid bills cannot be invested in a more productive way. A creditor gets in fact poorer when the payment of his sales is delayed.<\/p>\n\n\n\n<p><strong>Delayed payment cannot turn into a debt spiral for the debtor.<\/strong><\/p>\n\n\n\n<p>A banker (the professional for loans) will limit his risk by gathering information and will probably require a guarantee before to make a loan. The unpaid creditor does not benefit from such tools.&nbsp; In this perspective, the interests on unpaid bills must be high enough to deter the debtor from using such devious means of financing himself.&nbsp; Besides, such debtor risks entering a debt spiral.<\/p>\n\n\n\n<p>More: <a href=\"https:\/\/tcm.be\/en\/costs-of-third-party-debt-collection\/\">costs of debt collection<\/a><\/p>\n\n\n\n<p>Updated 18\/8\/2016<\/p>\n\n\n\n<p>Definitions provided under this section refer to the Belgian situation; unless specified otherwise. The texts are meant to summarize concepts in daily language and should not be considered as comprehensive or definite. We welcome suggestions for modifications or additions at\u00a0<a href=\"mailto:glossary@tcm.be\">glossary@tcm.be<\/a>.<\/p>\n","protected":false},"featured_media":0,"template":"","class_list":["post-69153","glossarium","type-glossarium","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/tcm.be\/en\/wp-json\/wp\/v2\/glossarium\/69153","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tcm.be\/en\/wp-json\/wp\/v2\/glossarium"}],"about":[{"href":"https:\/\/tcm.be\/en\/wp-json\/wp\/v2\/types\/glossarium"}],"wp:attachment":[{"href":"https:\/\/tcm.be\/en\/wp-json\/wp\/v2\/media?parent=69153"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}