Is there a consensus strategy for making loans? After much trial and error I've settled on an approach trying to minimize the number of defaults. If the borrower is a shopkeeper or trader, I only lend small amounts at low or very low interest. If the payback amount is over 20,000 I won't touch it unless the borrower is a councilman or higher. Patricians and Lord Mayors seem to be able to afford to borrow more at higher interest rates, and they have more reputation to lose if they default, presumably.

I'm wondering whether or not it would be feasible to focus almost entirely on usury. Once you get offices in several different towns, you can make lots and lots of loans.

The "strategy" is hoping the loans burst. Then you get a ship or goods that didn't exist in the game world before for a tiny dip in popularity. That grain might be a bit more expensive considering the amount you lent for it, but it could very well be the difference between a town getting over the winter or famine stopping your progress there for months. A shipful of wood enabling you to expand earlier than expected... This is cheatingly good, even if it looks like you lose some coins. No point being friendly and letting them run away when they can't pay, unless its like days before the election when you're not sure you will win.

People usually assume higher rank means better chance they pay back, but I'm not aware of this having been conclusively proven. The small sums you concentrate on probably prevent you from getting ships, you might want to rethink this strategy.

This is assuming you are out of the starting phase where money is an issue, if you suddenly need to take a loan yourself its interest negates all profit you might have made from lending.

There are only so many loans the game offers at once, a new one every couple of days in each town, but that is never increasing. I tried games where I did nothing but give loans, but can't say for sure it works. That depends a lot on the first ones to pay back, if they fail taxes might have eaten enough of your cash that you can't give another. And of course this way of playing makes the goods and ships from defaults pretty useless. Besides being slow and boring.

I can't say I've conclusively proven it either, but I suspect there's some truth to it. It would take lots and lots of testing to be sure, unless you could look at the game code directly (and I'm sure there's a chance of default for any loan, no matter how safe it looks on paper). I just try to avoid lending large amounts of money to low-ranking people. I'm perfectly happy to float 6,000 to a shopkeeper, but I'm not going to hand him 18,000. I don't remember ever seeing a Lord Mayor default on a loan, but I could be wrong.

I think I'm getting fewer defaults since I started following this policy.

I just discovered that you can get ships from lenders who default. That's pretty rich, actually, since ships can be used to generate money.

I haven't noticed the reputation penalty to be very large, either, but then I haven't ever tried confiscating property when the Repayment letter recommends against it.

I'd still like to find the sweet spot for lending that produces the most return in interest with the least risk of default. How many ships do you need, anyway? Once you have 10-12 ships the game becomes difficult to manage. At least for me. If you have a single really good crayer with a hotshot captain you can capture pirate ships (even hulks) with relative ease, so you don't really need to confiscate any.

Nailing this down would require recording every single loan and its return - I'm not sure I have the patience to do that kind of accounting.

correct Lord Mayor isn't a rank, patrician is the rank you need to be elected, npcs manage that at lower ranks. But anyway those people aren't "real", the game just invents some names and with the somewhat small names database, it might sound like its the local trader from Malmö or the Mayor of Newcastle, but its just name coughed up to populate the list of loans. Its tiny compared to what you gain from selling stuff, reputation doesn't scale well. Let's see, a convoi for each town, say 20 ships each, expanding as the town grows... 3 of them need to be crayers or snaikkas only, for the river towns. A few pirate hunters, single crayers for me as well, but travelling in pairs to have replacement at hand. 20-hulk convois to take out pirate hideouts, I *hate* fighting on those tiny shore maps, so it needs to win on auto; two of them because repairs take so long. Some expeditions, pirate cogs have just the right size for America. Some big building mats transports for new towns, city walls and such. A few fast crayer convois to sell/buy/move goods manually. Hmm 1000 ships should be enough? Surplus can serve as swimming warehouse until needed. SCNR, the idea of too many ships just doesn't compute :-D
P3 is remarkably stable and really playable to such sizes; if you ever feel like slowing down and becoming the sole supplier of everything in a 1mio people hansa, the game will not stop you.

I thought so. It's too bad, actually. It would be much more fun if they were "real" people in the towns and their reputations would be destroyed if they defaulted on a loan.

But I have seen every rank of borrower from shopkeeper to Lord Mayor (even though the town already has a "real" elected Lord Mayor). Ha ha! You've obviously played this game a lot more than I have!

I haven't even tried making an automated trading route yet. I've gotten the automated warehouse managers working fairly well though.