Loans

[Buck Turgidson]

Instead of seeing it as a loan, it should be a bond:

- A bond could be any resource, as well as cash, payable in kind. This would lead to higher defaults than restricting it to cities, land, and infra, but the interest is meant to cover the risk.

- When prices move down, interest will automatically move up, and vice versa. Say you took out a bond for 1000 Food when the price is at 100 (ie very low) - in the expectation of a price rise over the next 4 week, the interest rate might be 3%, but when the price is 150, it might be 1/2%, because it's unlikely to rise. This simulates the pickle the US and China are in with each other today.

- Defaults should force automatic selloffs of military, then improvements, starting with civics, then commerce...etc until the books are in the black again.

This would add a huge speculative interest to the equation, and be good for big and small nations alike.

Anyway, that's what I think, so you better listen.

[Ishmael]

Don't like this idea. Banks and alliance loans are already widespread in the game. Also, repayments should not be mechanically enforced. Players defaulting on debt  increases the complexity of the game and makes lending more realistic. It forces lenders to take default risk into account and drives player interactions (threats of war to ensure repayment etc).

Also, if repayments were mechanically enforced, whales would become financial monsters, because they wouldn't invest in cities anymore. Upper tier cities have such low ROI that it is always preferable to lend to new nations. If there was no default risk and repayments were assured, whales would just stop buying cities entirely and only lend. Upper tier cities are a big money sink and vital to the game's economic stability, because they help keep inflation in check (at least somewhat...). So if this was implemented, inflation would probably spiral out of control, causing all sorts of problems!

[Sir Scarfalot]

Or, and stay with me here, we could have players doing this. Then they can bring their own dynamic™ interests and risk management and grudges to bear, and the game would be super interesting and fun!

Wait, we already do... What we don't have is any exceptional penalty to the borrower if he defaults. Perhaps we could have a loan market, where one 'buys' stuff or money and then their debt is recorded on their nation. Even if it's merely cosmetic, a public accounting of debts would be interesting, especially if it were tied to the bounty system.

[Valdoroth]

On 2/26/2018 at 10:20 AM, Sweeeeet Ronny D said:

I look forward to having kids learn about taking on soul crushing debt. 

Can we make this mafia style if they cant pay back their loans, which means that the lender can destroy a set amount of infra/land/improvements every week they don't get paid back, and then exponentially increase the interest on top of it?

That could potentially make them forever in debt. Losing infra = losing income, so not only would the loaner be unable to pay, the lender would be out of that cash they loaned.

----------------------------------------------------

I think that the repayments should be instead implemented as an automatic X% out of their income deposited directly into the lender's bank. This could be set as the term limiting factor for the most part. Naturally, as a nation grows, their income increases. Alternatively, if they cannot pay back the loan in time from their personal bank, then their income is set to send 100% to the lender instead until the rest is paid off. Also, it shouldn't allow people to take loans they can't repay back in less than 31 days at 100% income. Since a whole month of 0% income that's not even tax from your AA would suck and be detrimental.

For example:

Quote

Joe has 5 cities and takes a loan for 4m from Billy paying off at 50% of his current income rate which is 440k/day. The game calculates that it'll take 18 days to pay off, so his interest rate is 1.12% per day (doesn't increase), so he'll owe 248k per day instead, for a total of 4.48m at the end of the loan period. Joe gets raided in the middle of his loan payoff, and loses 120k per day and now only makes 320k/day. Now 50% of his daily income can't cover the cost, so the payback rate is automatically increased to 100% instead until it is paid off. It pays off a little early, but Joe was out of income for rebuilding for a week.

I don't think an automated purchase is optimal for this in most cases. I would only have it such that when a player goes to buy a city or buy X infra in all cities at once(mass infra purchase - add this feature) and are short on funds the game asks if they want to take a loan. This then takes them to the loan's page (much like the trade page), and they can pick the amounts and payback options. Then after selecting the loan it returns to complete the purchase. If they cancel the deal, the loan is reverted back. Nothing is actually committed until they accept the loan and purchase the infra or city. Once they accept, the loan is taken, the purchase is made, and the automatic payments are initialized and begin right away.

[Sir Scarfalot]

33 minutes ago, Valdoroth said:

That could potentially make them forever in debt. Losing infra = losing income, so not only would the loaner be unable to pay, the lender would be out of that cash they loaned.

This is the same balance issue as with war; only here at least the borrower and lender are going into it with both eyes open and so it is at least an opt-in scenario.

Compounding debts, muahahaha >:D

[Bortwald]

There's a ton of things you could work on and you focus on one that players are handling on their own?

Edited February 28, 2018 by Bortwald

[WISD0MTREE]

On 2/26/2018 at 10:20 AM, Sweeeeet Ronny D said:

I look forward to having kids learn about taking on soul crushing debt. 

Maybe then they'll not max out their card in the first week, lmao. 

 

On 2/26/2018 at 0:16 PM, Dr Rush said:

Amazingly, almost all the same points apply to the Alex reskin as the original idea.

Seems to be a recurring theme. 

"What has been will be again,

what has been done will be done again;

there is nothing new under the sun."

-Ecclesiastes 1:9

[Dubayoo]

The bottomline is the game would benefit from a bank listing page like Lendingtree.com.

Don't implement a mechanic.  Just give players the option to offer credit lines like they offer resources on the trade market.

[Marianna]

I don't like this idea as something players can do. However an auto-payback system for alliances to use with their members would be cool. It would make paying back city loans easier.

[Sir Scarfalot]

7 hours ago, Marianna said:

I don't like this idea as something players can do. However an auto-payback system for alliances to use with their members would be cool. It would make paying back city loans easier.

Honestly, you can just do that with putting them into a higher tax group.

If anyone's having trouble squeezing money out of their members, then that's a much deeper problem for that alliance.

[Guest Frawley]

90% of the criticism of Sebs idea is applicable here:

Game guaranteed insurance is just another rebasing of the risk free rate above 0%.

Automated purchases remove agency from players not to mention rule #1 in banking: You should trust your customer. 

Automated Payments that cannot be cancelled remove agency, add new issues (War, Negative Income, Alliance Taxes).

Finally this just replaces what players already do, and that should be enough to stop it. As previously mentioned, if you wanted to further enable player meta activities, just add a loan market that allows bankers and players to find each other. 

 

If you do want to do something that does help, why not add a 'Scheduled Payments' feature in the game, at least then players can send money as per a privately negotiated loan agreement/insurance contract/derivative etc etc.

Edited March 6, 2018 by Frawley

[Paul Warburg]

I'm generally in favor of this. I don't like the default system as presented. I have an idea with the default system assuming the player is active, but is not paying off any principle, and another idea if they are not. 

Default by the banks, due to this feature alone, will change. With this in mind, the interest payments are fully automated, without intervention, while the other payments are not. I suggest that other payments are made here too, with the approval of the user. 

For monetary payments (cash), a value is assigned an a button is pressed to send payment. 

Non monetary payments are harder. Davos Iron Bank does accept them, so they are relavent. All resources are shown, and the user gives how many resources are going to be used as payment. Each resource that is going to be sent, must have a  ppu (think the trade mechanic), and the math there is simple. If multiple resources are used for payment, then add the values up. However, the ppu and values will have to be accepted by both parties. Note that the market value is not relevant in this mechanic.

 

On occassion, Davos will reward loyal customers by deducting x amount of dollars from the account. The lender should be able to reduce the principle of a loan. Most of you did not know davos actually did this, but that's what you get for picking the wrong bank.

Defaults will be a required setup before lendors are able to lend out debts. Each week x% of the interest/principle due is required. Miss x weeks of payments, then you will be in default.  The consequences will also be settings. Theres a couple of solutions to this, revolving resources. Credits are not exempt from this mechanic.

1. x% of uranium, x% of gasoline, etc. will be taken from the person in default. If a value is blank, then the default is 0.

2. X% of all resources are taken. (static percentage accross the board) upon claimage of debt.

In case of defensive wars, the automation and defaults will be frozen. If there is an offensive war, this is optional. The lender should have 3 options for the default in case of offensive wars.

1. Always freeze

2. Do nothing

3. Case by case, manuel decisions.

In case of manuel decisions, the interest due becomes unusuable (but stays inside the debtors nation) until a decision is made.

 

After a nation gets a default flagged, the debtor has the option to confirm its default. A flag is required to help prevent human error from doing harm. If nothing is claimed, then everything stays the same. If the flag is confirm, then the settings above take affect. 

Interest payments will be deducted before AA taxes. Alliance leaders will hate this, but you guys will be seeing an increase in revenue regardless. Suck it up.

 

If an account is sold, there should be a mechanic to this too. Both monetary and non-monetary resources can be used to acquire debts, but this transaction must be agreed upon before it goes in affect. Once agreed on, the resources and cash will be sent while the account is transfered. Interest rate must stay constant.

If a nation has been banned, then the principle gets refunded to the lendor. If a nation is deleted, then only 50% is refunded. If they decide to ignore their debts, then no hard mechanic is implemented. Bankers should be protected from certain actions to varrying degrees.

 

Feel free to commit on this. Maybe I missed something or you just feel like you must have to have an input.

 

Edited March 6, 2018 by Paul Warburg

[Paul Warburg]

1 hour ago, Frawley said:

90% of the criticism of Sebs idea is applicable here:

Game guaranteed insurance is just another rebasing of the risk free rate above 0%.

Automated purchases remove agency from players not to mention rule #1 in banking: You should trust your customer. 

Automated Payments that cannot be cancelled remove agency, add new issues (War, Negative Income, Alliance Taxes).

Finally this just replaces what players already do, and that should be enough to stop it. As previously mentioned, if you wanted to further enable player meta activities, just add a loan market that allows bankers and players to find each other. 

 

If you do want to do something that does help, why not add a 'Scheduled Payments' feature in the game, at least then players can send money as per a privately negotiated loan agreement/insurance contract/derivative etc etc.

I feel that this needed to be a seperate message. If they decide otherwise, delete this post.

Let's be honest, you never ran a bank, and must be unaware of how the bank market works.  The bank never trusts its customer, and the customer never trust the bank. The exception are for those invested, if you count them as customers. This a real world concept that applies somewhat IG. Maybe you do trust Seb, maybe you don't. Maybe you just want a goddamn loan and the only way banks will take you on is for an IG mechanic to be implemented. I think its a fair tradeoff.

[Guest Frawley]

1 hour ago, Paul Warburg said:

I feel that this needed to be a seperate message. If they decide otherwise, delete this post.

Let's be honest, you never ran a bank, and must be unaware of how the bank market works.  The bank never trusts its customer, and the customer never trust the bank. The exception are for those invested, if you count them as customers. This a real world concept that applies somewhat IG. Maybe you do trust Seb, maybe you don't. Maybe you just want a goddamn loan and the only way banks will take you on is for an IG mechanic to be implemented. I think its a fair tradeoff.

I'm a Banker IRL and we have a less perfect information than in a game with an exact income formula.

There are equivalent constructs IG for almost all aspects of what we do.

Enforcement: War

Guarantees: Alliance backed loans

Bankruptcy: Nation Deletion

If you don't trust your customer, that should be either part of your price, or you shouldn't make the loan. 

Edited March 6, 2018 by Frawley
Grammar, Clarity

[BlackAsLight]

I like the idea of a loan machanic, however I don’t think there should be a insurance policy, but instead we are allowed to destroy a percentage of persons infra and/or land (This being the only way so far for one to destroy someone’s else’s land) if payments end due to negative income and we are tired of waiting. If a nation gets automatically deleted due to inactivity then I think the lender should get 60% back of the remaining money owed. 

I think the borrower should have the option to choose how much they pay back each turn, but still letting the lender choose at what’s interest rate. I think the borrower should be able to choose out of a fixed payment each turns or a percentage of their net income the same way taxes work. 

[Kyle N]

One thing people may worry about, is getting a new player to accept a really messed up/Unfair loan, that would set them in horrible debt for the rest of the game and make the banker profit. 

[Johnny Costello]

On 2/26/2018 at 1:19 PM, Tywin Lannister said:

Seems like a fair idea. This already exists by and large for the mid tier players, but no one loans out to new players without any reputation so essentially banks only loan out to people with good reputation. This way, new players will also be able to benefit from the loans. 

The default insurance part needs to be worked out a bit to make sure there is no abuse of the system. 

Micro Bank offers 5 city nations a minimum of 15m.  Should check me out bro.  ?

[Tamasith]

Is this subject and idea still a thing to be possibly implemented in the future?

[ernadrey11]

Hey guys, sorry for reviving an old thread, but I've been hunting for similar info, and many of you have some excellent points. I think this loan mechanic idea is pretty neat! It could really help out new players and make the game more fun for everyone.

[BrettHodge]

Hello everybody! I'm new here and just wanted to share my thoughts on the loan mechanic idea. I think it would be awesome to offer funding to new players to help them get started. The loan mechanic sounds like a cool idea, and I like the proposed restrictions to prevent abuse.Hello everybody! I'm new here and just wanted to share my thoughts on the loan mechanic idea. I think it would be awesome to offer funding to new players to help them get started. The loan mechanic sounds like a cool idea, and I like the proposed restrictions to prevent abuse. I also appreciate the idea of having a subforum or Discord channel where loan-takers could come to negotiate with loan offerers. And if you're looking for a mortgage broker, I recently discovered Mortgage Broker in Rotherham, which might be helpful. Thanks for letting me share my thoughts!

Edited May 17, 2023 by BrettHodge