In Hong Kong, it's well known that there is a cap on the interest (48%) one can charge for loans per Money Lender's Ordinance. Now let's say Mr. X needs $100. He has an apartment that is valued at approx $1000. He takes a $100 loan from an unscrupulous money lender, repayable over 10 years, at 20% p.a. secured against the apartment. The loan contains a clause that says if the borrower defaults on any payment, the whole loan including future interests would be immediately payable. Now, the kind of person who'd take a loan from "money lenders" at 20% interest instead of "banks" is the kind who's not particularly creditworthy. So, almost inevitably, Mr. X fails to make a payment towards the loan, let's say 2 years later. So, in the first year principle+interest=$100+$20, let's say repayment is $30 second year, principle+interest=$90+18, let's say $30 is repaid as well after the second year, principle is $78 If Mr. X defaults at this po...