The reason these loans can be made without collateral for the rates they are is the loans are not discharged easily. They’re still a benefit to both parties, be

The reason these loans can be made without collateral for the rates they are is the loans are not discharged easily. They’re still a benefit to both parties, because both gain from them on average. No one is stupid here. Stupidity would imply a net loss on one or both sides, which simply isn’t true.