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it's expensive and means-tested. You don't get to keep everything, even if everything doesn't amount to much.
by RyJones 14y ago
it's expensive and means-tested. You don't get to keep everything, even if everything doesn't amount to much.
- eupharis 14y agoExpensive in this case (for the US) meaning $700 to $2000. Which is rather a lot for the insolvent. Not to mention the paperwork sounds like an ordeal. I think there is a psychological block for a lot of people too. It takes a certain point-of-view and education to be able to enter into lending arrangements with creditors with the perspective: "I believe I am going to make a profit and we will both win. But there is a chance I will not be able to. The lender is self-consciously taking a risk, which they are being compensated for via interest (same basic principle with an investor). If things go badly and I need to declare bankruptcy, then well, yes, it sucks. But I have done nothing morally wrong." Fun fact: Henry Ford, Abraham Lincoln, and Walt Disney declared bankruptcy.
- lifeguard 14y agoDonald trump has -- TWICE!
- philwelch 14y agoPart of interest compensates the lender for risk, but the rest of it--most of it, in fact, if you have good credit--is just time value of money.
- eupharis 14y agoInterest compensation for risk is distributed, granted. X percent of creditors will default on their loans. You don't know ahead of time who will and who won't. So demand Y percent from everyone over and above what you would in a world where everyone paid. If that's not what you are getting at, I don't get your comment? Unless we are talking of a foolish lender? Edit: Durr. Just got it. You are talking about the return the lender receives, the reason he lends instead of consumes. Yes, part of interest is risk compensation.