Effects of taking a loan

[unmerged(29218)]

I really should know this, and I even have a recollection of having read the answer, but no matter how I search I can't find it. So, embarrasing as I find it, here goes:

Loans. Are there any effects from taking a loan, except having to pay interest and eventually repay it? I play 1.08, no betas.

Reason for asking: The other night I did a test drive with Sweden GC. My first economical priority was to build TCs everywhere, but it would take ages to muster the money needed. By taking a loan the process was accelerated immensely. The four TCs it bought me gave me census taxes enough to both build the rest of the TCs and repay the loan after five years. True enough, by then I had paid something like 70 D in interest. Minting, on the other hand, would have given me approximately 2% inflation.
I have gathered that loans are usually adviced against. Have I missed something here? Taking a loan seemed to be the best course of action in this situation, which by the way can't be uncommon.

 

[Flammehav]

I'm not sure, but I think you get some inflation for taking a lone too. Even if you pay it ontime.

 

[Underhand]

I'm not sure, but I think you get some inflation for taking a lone too. Even if you pay it ontime.

That is no longer the case. You used to get +1% inflation when you took a loan, but you don't any more.

 

[iBaLkiD]

That is no longer the case. You used to get +1% inflation when you took a loan, but you don't any more.

Yeah but in Horvendiles situation, even with the old Inflation stab, it would still pay off to take those loans, jump start his econ and whittle that inflation down to nothing. After all were talkin about 2-4% inflation here. You might just get lucky and get a random event that nixes your inflation by 5% iirc.

I think he has a real valid question. Are loans more viable now then in previous patches? It really seems so in the example he gave...

 

[unmerged(19042)]

I have gathered that loans are usually adviced against. Have I missed something here? Taking a loan seemed to be the best course of action in this situation, which by the way can't be uncommon.

Sort of depends on your economy, eg with Scotland I think twice before taking a loan as I would have to save census taxes for two-three years to be able to pay it back. Compared to France where a quick loan of 200d that is only half the annual census tax isnt a problem to pay back. You can always extend the loan at higher interest though. Most investments you make from the loan though dont pay back their value for 20-30 years (TPs, colonies, manus) and that incrementally, so you need to keep in mind that you will need a stack of 200d at one go.

The old inflation hit wasnt too much of a problem as 1 gov = -1 inf %, now tthe proportional 0.25% stuff, 1% inf for 200d probably wouldnt be worth it (compared to say 1% inflation or 1 stab in the corruption events where taking the inflation hit is a nobrainer).

 

[unmerged(29041)]

There is a secondary penalty in which if you finally bankrupt, you will receive an inflation of 10% for the bankruptcy, + 1% for each failed loan.

 

[Ericus1]

You can always extend the loan at higher interest though.

It's better to take a new loan to pay the old one than to choose the extend option. A new loan will at most be 1% point higher intrest, if any, while an extended loan will usually be much higher. A bit of an exploit, but meh.

 

[Underhand]

It's better to take a new loan to pay the old one than to choose the extend option. A new loan will at most be 1% point higher intrest, if any, while an extended loan will usually be much higher. A bit of an exploit, but meh.

Bugger! How come I never thought of that? :rofl:

 

[unmerged(34790)]

well... i always used the take a new loan and pay the old one model... works fine for me ... some times you even get a lower interest, if you took the original loan while having a low stab'

 

[DSYoungEsq]

well... i always used the take a new loan and pay the old one model... works fine for me ... some times you even get a lower interest, if you took the original loan while having a low stab'

Yes, the only time this won't work is if you are at your limit for loans.

I do the same thing in Rails Across America, especially if rates are lower.


As for the underlying question; the only two issues to consider are: can you afford the interest on the loan (meaning, can you afford to forgo that monthly income given your plans and means), and how much inflation will it cost you to mint the money in question instead (a function of the amount of monthly income). As Scotland, I often find it necessary to take two or three loans at the start, especially if I am intending to defeat the English in a war and take several provinces right at the start of the game.