Glossary entry
Vig
VIG
Definition
VIG
Short for vigorish. The interest on a loan from a shylock, payable at intervals and separate from the principal, which is not reduced by paying it.
“A borrower who takes five thousand at three points a week owes a hundred and fifty every week and still owes the five thousand.”
The word reached American English from Yiddish, which took it from a Russian and ultimately Ukrainian word for winnings.
The mechanism is the whole cruelty of the arrangement. Ordinary interest reduces as the principal is repaid; vig does not touch the principal at all. A debtor who pays faithfully for a year has paid a great deal of money and owes exactly what he originally borrowed, and the lender's preference is usually that this continues indefinitely.