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Isn't that part of why down payments are so necessary? It takes the loan amount below the immediate depreciation amount of the asset so the bank/lender is less
by rtkwe 1y ago
Isn't that part of why down payments are so necessary? It takes the loan amount below the immediate depreciation amount of the asset so the bank/lender is less exposed to the risk.
- lxgr 1y agoI’d imagine the main benefit of downpayments to be behavioral, since otherwise the borrower has no stake in the asset initially.
- rtkwe 1y agoI doubt that's the main driver for lenders and people are generally pretty attached to and excited about their new cars. They also do have a stake they'll still be out time and money even if insurance covered the entire cost of the vehicle.
- lxgr 1y agoI wasn’t really thinking about people wrecking their cars, but rather about making future payments. Losing the use of a car and your equity in it to repossession is much worse than losing somebody else’s car alone.