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How do you handle the risk of defaults? If you never charged interest wouldn't anyone who offered loans just go out of business? I do think credit scores are a
by analognoise 4y ago
How do you handle the risk of defaults? If you never charged interest wouldn't anyone who offered loans just go out of business?
I do think credit scores are a scam (as are overdraft fees) and that rates should be reasonable, but no interest would make nobody lend money.
I like having a car loan - I was able to buy a car with current safety features. Without it I'd have to buy some unsafe (or unreliable) clunker in cash.
- al_mandi 4y agoBy prohibiting interest bearing loans, loans become relegated to purely an act of charity, and as you point out, there will no longer be businesses that are built only or mostly to lend money and profit off of usury. And that's a good thing. There's no reason why the car manufacturers won't be able to offer 0% interest on moderate term loans (a few years long). They already do today when they want to sell cars. This will drive prices down actually. You can also have longer term leases without interest, effectively paying for depreciation and the company can profit from leasing the car.