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The customer can't default if there is no interest, so just let the debt remain on the books forever. Well, I suppose you could take a loss if your customer die
by im3w1l 6y ago
The customer can't default if there is no interest, so just let the debt remain on the books forever. Well, I suppose you could take a loss if your customer dies, and the estate is insolvent.
- eloff 6y agoIf you're not making the monthly payments then that's still a default. I don't see how the interest changes anything. I guess you could argue if the bank is not paying interest on that money, then they won't lose anything if the client is in default. I think there's probably still opportunity costs to the bank in that case - they could be loaning that money to a client that pays additional fees and makes the payments on time. But I imagine they would still foreclose and sell the asset to recover the principal in that case. Which might turn a profit for them.