whotoblame
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They don't. Or at least they SHOULDN'T, anyway! |
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kelannde
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Most banks don't loan money to people who can't afford to pay it back. They do thorough credit checks to see if it is worth the risk, and they will turn down clients for loans if they are a bad credit risk.
There are other predatory loan businesses that will loan out money, though - check "floating" places, "pay day advance" and places like that.
Here's a question for you -- why would people who can't afford to pay back a loan ask for money?? |
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BRENDA
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They do not, but they do lend money to people who are less able to pay back than others.
This is all about risk and return. The higher the risk that you will default, the higher the interest rate you pay. Over a large number of people and time the banks get a similar return from each "credit group".
Sadly, this results in people less able to pay back having the highest interest rate. Which ironically makes it less likely they can pay!
This is the way that finance works, not just banks. Look at Corporate Bonds (debts issued by companies to finance their growth). The most creditworthy companies pay less interest (coupon) on the bonds, whereas less well-off companies issue high coupon bonds (sometimes called junk bonds), as it is the only way they can get people to invest and buy their bonds. |
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transplanted_fireweed
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They don't. Many people are turned down because their income won't support the loan or they haven't been employed long enough to have secure employment, or they have too many other financial commitments already. Banks often require collateral with values in excess of what you are borrowing so that in the event that you can't pay them back they can seize the collateral and sell it to pay off what you borrowed. It is possible some bank loans manage to get approved without proper credit checks and collateral, but it would be an big oversight rather than the norm. |
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jr1984
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They don't care they are throwing money and credit cards at people because they know they'll get the money eventually, with plenty of interest added |
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Gary
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For an unsecured loan, banks shouldn't loan out any money. Now, if there was some collateral and/or a good co-signer, then there is a good possibility of receiving a loan. |
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janny
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In the hope that these people have generous parents who'll end up paying back the loan when they find out the interest has got out of hand! People can get bank loans/credit online by lying about income. It seems the more debt you have the more you get offered. |
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Indi
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I used to be a loan officer and there is truth to what you’re proposing. They don't want you to not be able to pay it back but barely be able to so you don't pay it off early and they get their money from all the interest. You could easily pay 300k for a 100k home after 30 years. Woot 200k profit for the banks. The banks know that if you default on a home loan they foreclose and get the home for typically a lot less then the value. But if you can afford the loan and even pay it off early then they don't make as much profit.
Credit cards can have such a high interest rate that you can afford the $10-20 minimum payment but never be able to pay the $1,000 loan so they get your minimum payment as mostly pure profit.
The bottom line is they won't give a loan to someone they "know" can't afford it (unless it’s a mistake) but to someone who can barley afford the monthly minimum payment insures they make more money in the long run. Hope this helps. |
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Rachel M
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Because a bank is a business. It knows that eventually, one day, it will get that money back. The longer it takes, the higher the interest rate, finance charges, whatever. It's your responsibility to pay it back, not the banks fault if you fall behind and get your car repo'ed. So, yes, The Bank may seem like a corporate god, trying to trick you out of more money, but then again, you also know what will happen if you don't. |
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Fl. Guy
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loans are often made based soley on your credit score.
It tells the bank you have a history of making smart financial decisions.
the problem in the lening industry now is largly related to flexible rate mortages where the payment may be much higher now than when the loan originated and also with what ar ecalled sub prime lenders who were willing to make loans to risky clients at a higher interest rate.
now you have a lot of people who made a bad decision on a loan they could barley afford , the rate went up and they can't afford the new payment. |
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Oldboy
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Banks don't loan money to people who can not pay it back. Sub-prime loan companies do. Banks lenders look for people with good to excellent credit scores, stable employment, and at least some money of their own. Banks typically loan only 70-80% of the actual value of property. (cars, homes or land) |
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lilmissdisorganised
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So they can screw them for every penny in charges. |
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Tari
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because they know that you will not be able to pay it off quick so you will pay lots of interest and if you miss a payment you will have to pay fines. they are gits like that. i get stuff in the post all the time its a joke. my boyfriend is waiting for his refund from the bank charges from halifax-over £1000 and they had the nerve to send him a letter offering him a loan! |
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I know nothing
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They are modern day Dick Turpins. |
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Voltyr
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They don't have to be able to pay it back right away to get one. The bank may loan someone 10,000 dollars to get back up on their feet after a fire. Eventually the bank will come knocking and hopefully, after a couple months or a year, they will have enough money to pay the bank back. If not, i believe the bank can take stuff from you such as furniture, cars and even your house to pay it back. Then you are bankrupt. Note: I do not think u can borrow money when you are bankrupt because you already repeated the whole process above once. |
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Beenless
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they can afford to pay it back don't want to sooner borrow it blow it then keep whining to shows like watch dog saying i didn't realise they'd want it back. dum asses |
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Lord drydreamer of that ilk
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Do they? could you tell us the name of the bank that does that |
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sam t
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banks make most of their money on interest. credit card companies make billions of dollars a year because of people who cant make their payments on time. its all about making money |
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GEL
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TEY THINK PEOPLE ARE GONNA TRY TO WIN THE LOTTERY OR SOMTHING WITH THE LOAN. THEY ARE WEIRDOS!!! |
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