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Why do banks only lend money when you have assets that are as valuable as the loan?
Wiki User
∙ 13y ago
Usually banks do not expect you to pledge assets that equal the value of the loan if you have a good job and earning capacity and a good credit history. However, they may ask you to pledge assets in case your job is unstable or your credit history is bad.
This is because, the bank would need some kind of assurance that, even if you stop earning or repaying your loan, they have some means of recovering the money they are going to lend you as part of the loan.
Wiki User
∙ 13y ago
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What is it called when banks lend money to customers?
It is called a loan.
Banks lend out the money that you deposit to make a profit?
Yes.
How can a bank create an infinite amount of money?
Banks do not create money, they only use the money from saving accounts and lend it to people. When they lend the interest from the loan is profit for the bank.
Do you have to be a bank to lend money?
No, anyone with money can lend money. However, banks follow a proven process before lending money, that includes verifying income, checking credit ratings, requiring signatures on powerful contracts and so forth. Banks have established a best practices process for lowering their risk of loss and elevating their chances of making money in interest on money they lend.
Why do banks give interest on deposit?
Banks make money by lending money to people and charging people for borrowing. The amount banks charge is called interest. Banks borrow money from other people and pay them interest on the amount borrowed. Banks charge more interest on the money they lend than they pay one the money they borrow. That is how they make money. When people deposit money with a bank, the bank is literally borrowing money from some people so they can lend it to other people. That is why banks pay interest.
Who lend money?
Money lenders and banks.
Who can lend you money for a house?
people at banks
To whom does the Fed lend money?
other banks.
What is it called when banks lend money to customers?
It is called a loan.
Banks lend out the money that you deposit to make a profit?
Yes.
What is it called when banks lend money to businesses?
Workers and Businesses
How can a bank create an infinite amount of money?
Banks do not create money, they only use the money from saving accounts and lend it to people. When they lend the interest from the loan is profit for the bank.
Where did the bank gets its money to lend?
They get it from the other Banks customers accounts i think!
What is a example of a monetary policy?
The government restricts the amount of money that banks can lend.
Why did Herbert Hoovers theory of trickle-down economics fail to work as he had hoped?
Banks refused to lend to buisnesses.
Do you have to be a bank to lend money?
No, anyone with money can lend money. However, banks follow a proven process before lending money, that includes verifying income, checking credit ratings, requiring signatures on powerful contracts and so forth. Banks have established a best practices process for lowering their risk of loss and elevating their chances of making money in interest on money they lend.
Why do banks give interest on deposit?
Banks make money by lending money to people and charging people for borrowing. The amount banks charge is called interest. Banks borrow money from other people and pay them interest on the amount borrowed. Banks charge more interest on the money they lend than they pay one the money they borrow. That is how they make money. When people deposit money with a bank, the bank is literally borrowing money from some people so they can lend it to other people. That is why banks pay interest.
