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There is no requirement to buy things on a loan. Many people do it because sometimes it is cheaper. Businesses tend to require it for ease of processing or beca

There is no requirement to buy things on a loan. Many people do it because sometimes it is cheaper. Businesses tend to require it for ease of processing or because it's legitimate and secure. Like say a guy wants 6k car from your dealership and will pay in cash. For all you know it could've been stolen as part of a crime. That cashed he paid can be seized, potentially even with the vehicle. If it was done through a bank, the headache and loss is now on the bank instead. In my experience as an american, to survive and have wealth, you need to be an accountant with your budget. Almost like treating your personal lifestyle as a business enterprise. Including all the wants and toys for yourself. It's a very simple thing to do even but many people forgo it it and just look at their bank account number, often forgetting the oncoming loan payment, things payed with a check, ach's, etc. A good one people forget is student loans or cash out refinancing. That money in your bank account isn't equity. It is an asset offset by a liability. If you have 6k in cash but a 5k loan, your net worth is 1k. Most Americans just see the 6k, forget the 5k, and think that aforementioned 6k is free to be spent as they see fit. Most Americans are just brained spendathon morons with money. Look at the money people donate to streamers! It still floors me people just make absurd donations...for what? Someone to play videogames on the internet? Not to mention juggling social status with finances, most Americans tend to opt for the status symbol as opposed to the cash in the bank. This is why you see college kids with escalades or camaros when they don't even have a reasonable job to afford a payment on them.

bsder 6y ago
> Most Americans are just brained spendathon morons with money. Look at the money people donate to streamers! I don't agree with this statement. What you and I see are those with the means to do this. I knew quite a few techie types who used to spend fairly enormous amounts on strippers. However, the system itself is rigged against those who are barely scraping by. Here's my anecdote from the system: I had a car seized over a single $44 parking ticket (parked longer than 3 days at the commuter train station terminal--which you can exceed by being a couple hours late after the weekend). Once it was towed (instant $200 fee tacked on) and in storage for a couple days, the fees were worth more than the car! And they auctioned the car before the time to contest the ticket had even expired. I would have had to cough up several hundred dollars that I would not get back just to contest the ticket. "Innocent until proven broke." If your institutional superiors yank your slave chain and you have the temerity to not show up immediately and say "Yes, massah!"--you will get the whip. As someone in tech, this was just stupidly annoying and I'm probably going to save money--my insurance went down by almost the value of the car. However, they swept almost thirty cars with mine. And were laughing about it. At least one (I would actually estimate probably about half) of those belongs to someone who can't afford to lose that car but can't afford to get it back now that its been towed. I can absorb losing a 25 year old car. Most people driving one cannot. "The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread."
FireBeyond 6y ago
> Businesses tend to require it for ease of processing or because it's legitimate and secure. No. The prevalence of cars being bought with stolen cash as a down payment is so small as to negligible. That might be some of the reasons they claim to do it, but the reality is simple: because it makes them more money. Kickbacks (sorry, "commissions") from financing companies, or the interest earned on in-house financing is the motivator.
olliej 6y ago
There is absolutely a requirement to use credit and loans. When I bought my house it was incredibly challenging because the mortgage folk required the I had had 3 lines of continuous credit for more than a year. My income was not relevant, because that was a hard rule that they would not change. I had to get a new line of credit and wait a year. That did the following: * The first credit check for the mortgage decreased my credit score, so interest rate on the new CC - that I *had* to use - was probably higher * Getting the CC required a full credit check, which lowered my credit score again * The new CC also lowered the average length of credit, which lowered my credit score *again* So when I finally went to get loan preapproval a year later my credit score was lower than it had been the first time round, and that impacted my interest rate, down payment, and available loan size more than the fact that I was being paid more. Sure you don't have to get a loan or credit. But if you don't, you get utterly screwed.
- MeinBlutIstBlau 6y ago
  That is partially because of federal law and regulations regarding the mortgage industry. They have to have a standard they apply to everybody so as to prove there was no bias against any particular race, gender, etc. So in a non-regulatory world, they might have looked at the income you've had over the period of time and what you've done with it. That being said, it does look weird to a lender why you possibly make more than enough for a mortgage yet only have 10% to put down. In the pre-fiat days, 20-30% was the standard minimum to put down which was also a reason why houses were so cheap.
  - olliej 6y ago
    IIRC I put down in the region of 20-25%. I didn't have a credit history precisely because I had a good income, and my student loan was first in another country, and also I paid it off as fast as I possibly could so it had been paid off for years when I was applying for a mortgage.
    - MeinBlutIstBlau 6y ago
      The US credit system isn't devised to be something where those with little debt are to be trusted most. It's 100% the contrary. Banks like to see how you handle debt. Every line of credit they monitor your payments and what you do with it. Also having large amounts of available credit but not using it shows you don't see debt/revolving credit as "free money" but something you have to pay back. So many Americans associate debt as being a bad thing. Debt is just an asset offset by liability. People of all walks of life in all income brackets can successfully manage debt in a proper way that can give you a good credits score. People who don't know how to handle debt fall into two camps: those who are up to their eyeballs in loans, and those who pay it off right away because they're afraid of interest. Credit cards and HELOC's are a bit different simply because they are devised to be continuously open and revolving. Credit cards being paid in full is a good thing purely because 30% apy is usury, flat out. Your income means nothing to a bank when you lose your job but had no debt. Your debt means everything if you lost your job but still could make payments on time and in full. Banks like to see that. It means you're a trustworthy borrower and can make payments on time in any situation. That's exactly WHY they give these people better rates. Also because of federal laws and equal opportunity for mortgage applications, they need to have a system that is unbiased for all. So while you think you got screwed, again, blame the 2008 USA government. They attributed somehow the mortgage crisis to racism and not enough minorities owning property and less so on the real problem: private mortgage brokers. These people are human filth that lie through their way in the process of lending, break federal laws CONSTANTLY, and maximize loan sizes without a care in the world so long as it gets approved. They make payday loans look like childs play. Yet the federal government hasn't touched these guys...
WhyNotHugo 6y ago
> There is no requirement to buy things on a loan. Many people do it because sometimes it is cheaper. It is if so many companies only take credit cards. They just don't take money. I do agree on you main point though: Americans are extremely uneducated financially. But I blame the system with is perfectly designed to work that way -- there's just no way to buy stuff online in the US with your actual money.
- MeinBlutIstBlau 6y ago
  Credit cards have more safety precautions built in them than debit cards do. You can dispute charges and they take care of fraud, not you. That's the beauty of this system. I don't understand why we need to honestly care for the people not prudent to the system at hand. If they aren't wise enough to realize "there's always a catch" then they deserve to be taken advantage of. Plain and simple. These types of people that have never experienced loss in their lives like that clearly have not been out much in general and these types of people really do need to realize that this fabricated utopian way of living has never happened, will never happen, and cannot happen as long as human beings exist.

bsder 6y ago

> Most Americans are just brained spendathon morons with money. Look at the money people donate to streamers! I don't agree with this statement. What you and I see are those with the means to do this. I knew quite a few techie types who used to spend fairly enormous amounts on strippers. However, the system itself is rigged against those who are barely scraping by. Here's my anecdote from the system: I had a car seized over a single $44 parking ticket (parked longer than 3 days at the commuter train station terminal--which you can exceed by being a couple hours late after the weekend). Once it was towed (instant $200 fee tacked on) and in storage for a couple days, the fees were worth more than the car! And they auctioned the car before the time to contest the ticket had even expired. I would have had to cough up several hundred dollars that I would not get back just to contest the ticket. "Innocent until proven broke." If your institutional superiors yank your slave chain and you have the temerity to not show up immediately and say "Yes, massah!"--you will get the whip. As someone in tech, this was just stupidly annoying and I'm probably going to save money--my insurance went down by almost the value of the car. However, they swept almost thirty cars with mine. And were laughing about it. At least one (I would actually estimate probably about half) of those belongs to someone who can't afford to lose that car but can't afford to get it back now that its been towed. I can absorb losing a 25 year old car. Most people driving one cannot. "The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread."

FireBeyond 6y ago

> Businesses tend to require it for ease of processing or because it's legitimate and secure. No. The prevalence of cars being bought with stolen cash as a down payment is so small as to negligible. That might be some of the reasons they claim to do it, but the reality is simple: because it makes them more money. Kickbacks (sorry, "commissions") from financing companies, or the interest earned on in-house financing is the motivator.

olliej 6y ago

There is absolutely a requirement to use credit and loans. When I bought my house it was incredibly challenging because the mortgage folk required the I had had 3 lines of continuous credit for more than a year. My income was not relevant, because that was a hard rule that they would not change. I had to get a new line of credit and wait a year. That did the following: * The first credit check for the mortgage decreased my credit score, so interest rate on the new CC - that I *had* to use - was probably higher * Getting the CC required a full credit check, which lowered my credit score again * The new CC also lowered the average length of credit, which lowered my credit score *again* So when I finally went to get loan preapproval a year later my credit score was lower than it had been the first time round, and that impacted my interest rate, down payment, and available loan size more than the fact that I was being paid more. Sure you don't have to get a loan or credit. But if you don't, you get utterly screwed.

MeinBlutIstBlau 6y ago
That is partially because of federal law and regulations regarding the mortgage industry. They have to have a standard they apply to everybody so as to prove there was no bias against any particular race, gender, etc. So in a non-regulatory world, they might have looked at the income you've had over the period of time and what you've done with it. That being said, it does look weird to a lender why you possibly make more than enough for a mortgage yet only have 10% to put down. In the pre-fiat days, 20-30% was the standard minimum to put down which was also a reason why houses were so cheap.
- olliej 6y ago
  IIRC I put down in the region of 20-25%. I didn't have a credit history precisely because I had a good income, and my student loan was first in another country, and also I paid it off as fast as I possibly could so it had been paid off for years when I was applying for a mortgage.
  - MeinBlutIstBlau 6y ago
    The US credit system isn't devised to be something where those with little debt are to be trusted most. It's 100% the contrary. Banks like to see how you handle debt. Every line of credit they monitor your payments and what you do with it. Also having large amounts of available credit but not using it shows you don't see debt/revolving credit as "free money" but something you have to pay back. So many Americans associate debt as being a bad thing. Debt is just an asset offset by liability. People of all walks of life in all income brackets can successfully manage debt in a proper way that can give you a good credits score. People who don't know how to handle debt fall into two camps: those who are up to their eyeballs in loans, and those who pay it off right away because they're afraid of interest. Credit cards and HELOC's are a bit different simply because they are devised to be continuously open and revolving. Credit cards being paid in full is a good thing purely because 30% apy is usury, flat out. Your income means nothing to a bank when you lose your job but had no debt. Your debt means everything if you lost your job but still could make payments on time and in full. Banks like to see that. It means you're a trustworthy borrower and can make payments on time in any situation. That's exactly WHY they give these people better rates. Also because of federal laws and equal opportunity for mortgage applications, they need to have a system that is unbiased for all. So while you think you got screwed, again, blame the 2008 USA government. They attributed somehow the mortgage crisis to racism and not enough minorities owning property and less so on the real problem: private mortgage brokers. These people are human filth that lie through their way in the process of lending, break federal laws CONSTANTLY, and maximize loan sizes without a care in the world so long as it gets approved. They make payday loans look like childs play. Yet the federal government hasn't touched these guys...

WhyNotHugo 6y ago

> There is no requirement to buy things on a loan. Many people do it because sometimes it is cheaper. It is if so many companies only take credit cards. They just don't take money. I do agree on you main point though: Americans are extremely uneducated financially. But I blame the system with is perfectly designed to work that way -- there's just no way to buy stuff online in the US with your actual money.

MeinBlutIstBlau 6y ago
Credit cards have more safety precautions built in them than debit cards do. You can dispute charges and they take care of fraud, not you. That's the beauty of this system. I don't understand why we need to honestly care for the people not prudent to the system at hand. If they aren't wise enough to realize "there's always a catch" then they deserve to be taken advantage of. Plain and simple. These types of people that have never experienced loss in their lives like that clearly have not been out much in general and these types of people really do need to realize that this fabricated utopian way of living has never happened, will never happen, and cannot happen as long as human beings exist.