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| *Loan,banking and credit>>>bank loan |
How come banks don't give out secured personal loans to a person with bad credit? |
Their getting their money either way????? Like if I asked for a $4000 loan and I put my car up for security. My car is worth about $5000. They know if I was stupid and didn't want to pay my loan payment they could just sell the car and get their money back.! So you better sell you car ! Consolidating your debts may be a good idea : http://index-go.com/debt-consolidation-r... Source(s): http://index-go.com/debt-consolidation-r... the reason they dont give people loans with bad credit is the fact that your credit reports shows how good you with paying you bills on time, and they dont want to give someone money if they have no intentions of paying it back. that is why if you have bad credit they always ask if you have someone with good credit that will co-sign for you, that way if you dont pay the other person will cause they wont want to mess up their credit. Pretty much the same reason why people with bad credit cant get a credit card. It can be expensive & time consuming to collect., they really don't want to own your car, they aren't in the used car business, you could always "skip" with your car, any number of things can happen, and it's not like the banks are having problems finding people with good credit who want their money. By the time you paid back the loan, the car would be worth far less than the $4000 owed. If you damaged the car, the value would be less. By the time they prosecuted you to get possession of the car, if you didn't hide it away somewhere, the value would be less. If they had to sell the car to recoup their $4000, they would have to spend money to do that, and banks are not in the business of selling cars. If you had something of real and lasting value, like a piece of land worth $10,000 they probably would loan money to you, but it isn't worth the trouble considering the example you gave. Good credit is important. Because cars depreciate rapidly. If you default a year from now, there might not be enough value in the car to cover. And they'd have to go to the time and expense of having someone repossess it, and sell it. That definitely takes a chunck of money as well. From the bank's perspective - why bother?... when they can make plenty of money from people with good credit with unsecured loans, without fuss or wasted energy, not dealing with the unpleasantries of a default situation? Secured loans are a hassle, pure and simple. (Unless it's real estate - in which case they can make a decided profit if the loan goes bad) your car may be worth 5000 bucks but it would cost them about that to hunt you down and tow the car away when you default on the loan. Plus you are borrowing 4000 which means you'll have to pay back a lot more than that. Have you ever heard of interest? And just because you thi nk your car is worth 5000, doesn't mean that's what it's worth. Retail it may be 5000 but a bank works on wholesale prices. If they had to take your car they would have to clean it, find a buyer, and I guarantee that 5000$ car is now worth about 2500. Fix your credit before you take more loans out. |
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