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I don't understand how it is legal / allowable for a bank just to call in a loan (unless the call option is explicitly documented and paid for by the originator
by retube 10y ago
I don't understand how it is legal / allowable for a bank just to call in a loan (unless the call option is explicitly documented and paid for by the originator / issuer).
If a loan is being serviced then it shouldn't be possible for a bank just to randomly demand repayment, jack up the interest rate, or otherwise change the terms of the loan. That seems grossly unfair.
If this is the standard in the UK, then I think we need legislation.
- anexprogrammer 10y agoIt's not uncommon for businesses to have overdrafts in place of or additional to loans for cashflow. The bank calls in the overdraft because of the bank's bottom line, rather than for anything related to the business itself or change in profitability. Was quite common in both the 08 and 91 recessions.
- amorphid 10y agoDepending on a line of credit to fund your business' operations definitely makes you the bank's biyotch. I remember Zappos being encourages/forced to sell for the same reason [1]. Their outcome had a happier ending, but they still had to sell. [1] http://www.inc.com/magazine/20100601/why-i-sold-zappos.html http://www.inc.com/magazine/20100601/why-i-sold-zappos.html