Quote:
Originally Posted by SteveDallas
LJ... or anybody else who has thought.... why the hell would a bank lend somebody 115% of the price of a car? I mean, yeah, I'm sure they check the credit ratings they'll only give it to people who are good for it.  But it just sounds like a bad move on the face of it. |
If you are a good risk, TD bank will actually lend 130% of retail value. why? because many people are carrying negative equity from one car to the next. Or they don't have liquid cash to put down to cover the tax and tags. They are in business to lend the money, so the more they can lend to customers that have demonstrated their reliability,the better..... and the safer that money is out there earning interest.
If you are sloppy about repaying your debts, or have limited ability to repay...they impose limits to mitigate their risk....such as max amount financed call backs, or payment ceiling stipulations. OR...they offset that risk with potential greater rewards....ie..higher interest rates. If they're going to have to call and remind you to pay, or initiate collection activities, they want to be compensated for that expense.