Quote:
Originally Posted by Sean Clayden
If those that are credit worther paid more as they are low risk (they can afford it) this would help those that are high risk to afford loans/mortgages at a cheaper rate.
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How do you make them pay more? You can charge them a higher interest rate, but that just means
fewer of them will borrow money from you.
If you charge high interest rates to the low-risk borrowers and low interest rates to the high-risk borrowers, you'll end up with a customer base consisting almost entirely of high-risk borrowers, and you'll be out of business PDQ.
Quote:
Originally Posted by Sean Clayden
If you can ill afford a loan or mortgage rate why should you pay more for it to supplement those on the opposite end of the scale ?
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You're not. Each level on the scale subsidizes itself.