Thread: Interest
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Old 03-15-2017, 06:39 PM
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Originally Posted by PickleBottom View Post
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...
A smart bank won't risk giving someone with bad credit a loan. A less scrupulous bank would give someone with bad credit a loan, collect some payments with interest (the way loans are amortized, there's more interest in earlier payments), and then once the debtor defaults, they repossess the property and liquidate it to recoup their initial investment.
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