Thread: Interest
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Old 03-15-2017, 04:08 PM
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Originally Posted by moonpunter View Post
Most loans the interest is fixed at the beginning, the rate determined largely by the debtor's credit score. Variable rate mortgages were a large part of why so many people lost their homes when the housing bubble burst, which is why it's not advisable to take out such a mortgage. Credit cards also have varying interest, which benefits the issuing bank because it keeps the debtor paying a lot longer. And if they can't pay, the bank just sells it off to a collection firm. They won't get the full balance, but they at least get a chunk of it.
But if the person has a bad credit score that should increase the risk, i.e. the interest, but as the person is a high risk the additional interest should hurt them more, increasing their risk...
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