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Because if there is a cap, they will not lend, it is simply as that. The higher rate is due to the higher risk, if they cannot have a higher rate, they will not take on the higher risk. This is basic finance 101.
They understand the economics just fine, but they see this as a moral issue. If a bad idea has any good intention, it’s time to do it regardless of how it turns out. To them, it’s moral to force others to live the way they want them to live.
No amount of logical or technical argument will change their mind. The only way to get through them is to challenge their fake moral high ground.
Giving high interest loans to poor people is like throwing gasoline on a fire, you'll keep that poor person indebted to the creditor in perpetuity
Nobody is forcing them to take out the loan. If you're about to be homeless and need that money to keep your mortgage holder or landlord at bay, would you rather have that high-interest loan or not?
You have crummy credit, you have exhibited a history of not paying your bills on time or not at all. You're a high risk and therefore deserve a high rate. The lender is taking on a big risk loaning you money, and they're going to want their reward. This is simple stuff here.
If you want to do something about this, maybe teach kids how to manage their money instead of teaching them about microaggressions and safe spaces.
Because if there is a cap, they will not lend, it is simply as that. The higher rate is due to the higher risk, if they cannot have a higher rate, they will not take on the higher risk. This is basic finance 101.
If the banks get into trouble the government will bail them out, just as they have in the past, using tax dollars to get that done ... but if people in general get into trouble they'll have to rely on friends and family to assist.
So let me get this straight ... putting a cap on lenders is a bad thing?
If the banks get into trouble the government will bail them out, just as they have in the past, using tax dollars to get that done ... but if people in general get into trouble they'll have to rely on friends and family to assist.
So let me get this straight ... putting a cap on lenders is a bad thing?
For the reasons they say they want to, yes.
They want to help the poor, however, capping interest will harm the poor as they will no longer be able to obtain loans/credit cards.
If the banks get into trouble the government will bail them out, just as they have in the past, using tax dollars to get that done ... but if people in general get into trouble they'll have to rely on friends and family to assist.
So let me get this straight ... putting a cap on lenders is a bad thing?
Quote:
Originally Posted by boxus
For the reasons they say they want to, yes.
They want to help the poor, however, capping interest will harm the poor as they will no longer be able to obtain loans/credit cards.
Quote:
Originally Posted by FirebirdCamaro1220
That might be a good thing, giving a high interest loan to someone who can't afford it harms them more than helps them
That was my thoughts too, because (2008) Pres Bush said every one should own a home, soon after that we fell into a recession, because of predatory lending to low credit score folks who couldn't afford to pay back the loans. But ... this paper says different:
"Our analysis finds that that all banks, tier 1, tier 2 and tier 3, showed a significant shift in lending towards corporate clients at the expense of lending in other sectors such as [small and medium enterprises] SMEs, consumer loans, and new borrowers. This is particularly notable since corporate clients already dominated the loan books of the banking sector, and the caps seem to have worsened that imbalance.
In the case of SMEs, which make up over 98% of all businesses and provide 30% of all new jobs in the country, the economic effects of a credit crunch are dangerous. Equally troublesome, the proportion of new borrowers receiving credit from banks significantly reduced by over 50% following the caps. These findings are consistent with a September 2017 credit survey conducted by the Central Bank of Kenya, where 54% of respondents confirmed that the interest rate caps had negatively affected lending to SMEs."
If the banks get into trouble the government will bail them out, just as they have in the past, using tax dollars to get that done ... but if people in general get into trouble they'll have to rely on friends and family to assist.
So let me get this straight ... putting a cap on lenders is a bad thing?
What right do you have to tell the lenders what to do? Are they your slaves?
That was my thoughts too, because (2008) Pres Bush said every one should own a home, soon after that we fell into a recession, because of predatory lending to low credit score folks who couldn't afford to pay back the loans. But ... this paper says different:
"Our analysis finds that that all banks, tier 1, tier 2 and tier 3, showed a significant shift in lending towards corporate clients at the expense of lending in other sectors such as [small and medium enterprises] SMEs, consumer loans, and new borrowers. This is particularly notable since corporate clients already dominated the loan books of the banking sector, and the caps seem to have worsened that imbalance.
In the case of SMEs, which make up over 98% of all businesses and provide 30% of all new jobs in the country, the economic effects of a credit crunch are dangerous. Equally troublesome, the proportion of new borrowers receiving credit from banks significantly reduced by over 50% following the caps. These findings are consistent with a September 2017 credit survey conducted by the Central Bank of Kenya, where 54% of respondents confirmed that the interest rate caps had negatively affected lending to SMEs."
Because of predatory lending? Just exactly what is predatory lending?
1. Lenders were forced by government to lend to risky buyers, whom they previously refused to lend to.
2. Risky buyers defaulted on their loans.
But somehow the banks are at fault? That’s the equivalent of blaming the rape victim not the rapists. Those people who default on their loans are the ones to blame.
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