Rebirth 79: I opened a bank in the United States

Chapter 16 The Harm of Installment Loans

As the federal interest rate rises, the loan interest rates of various banks will also rise, and after the rise, according to Carter's speculation, it should not be lower than [-]%.In this way, before the borrower wants to get a loan, he can calculate the annual interest rate of more than [-]% for one year, which means that he will have to pay twice the amount to the bank within three years.

Is it scary?Of course terrible!So the borrower is afraid to borrow, but does he still have a loan demand?Of course there is!If there is no demand for loans, he will not go to the bank to inquire about loans, will he?
If at this time, your own Black Bank turns out, tell him, come to me for a loan!Although my interest rate is not low, you can pay it back slowly.If you borrow one thousand dollars and pay it back in one year, you only need to repay about one hundred dollars a month, which is much less; Dollar up!if three years
In short, the longer you borrow, the less you will have to pay back each month.Ke Temiao repays the loan like this, but as a lender, he earns more!
Because compared with repaying the principal and interest at one time, when repaying the loan month by month, I have funds back every month, and then I can take the money again and continue to lend.The so-called leverage appeared!
It is normal to issue a loan of two to three million yuan for a period of time of one million yuan in this cycle!

"Hey! Are you listening? Are you still thinking about the unsecured loan?"

The more Carter thought about it, the more beautiful it became, and the more he thought about it, the more fascinated he became.Goodman stared at this fuzzy look, and raised his palm with the size of a cattail fan and shook it in front of Carter's eyes.

"Ah, no. The matter of unsecured loans is temporarily put on hold, and I will think about it later. But just now I thought of another idea. What is our current loan default rate?"

"Usually it's only around [-]%. It wasn't until the economic downturn in the past few years that it slowly rose. Now it's about [-]%."

Goodman looked at Carter suspiciously, for fear that Carter would have any new ideas.
"I see, I have a new idea"

Grass!What are you afraid of?

Goodman stared, his body trembling with anger, he raised his hand to
"As for the repayment, we can try to repay the loan in installments in the future. Instead of requiring a one-time repayment of the principal and interest after the due date, the principal and interest will be combined into one piece, and then distributed to each month, so that they can repay the loan month by month, so that the pressure on customers will be reduced. One point, our funds are also easier to return. It should be able to reduce some bad debt rates, even if it can't be reduced, it won't be like the current situation, where once a bad debt is broken, it will be so bad that there is no income."

Carter said lightly while bowing his head to light his cigarette.After speaking, he raised his head and saw Goodman's arm stretched forward, hanging in the air.Can't help but ask curiously:

"Goodman? What are you doing?"

"Ah? I, I. Fishing, yes, I'm going to fish. I forgot to wash my hair yesterday, and my scalp feels a little numb! Hahaha~"

The outstretched arms naturally circled the head, and at this moment Goodman really felt a little scalp tingling.As a bank practitioner, he has all the financial sensitivity that one should have.

Almost as soon as he heard Carter's narration, Goodman realized the value contained in the change of the repayment method, but at the same time, he also thought of the problems in it.

"Hiss~ Carter, I don't know if you are clear, but installment loans have actually appeared a long time ago. In the "Harrison Act" of 1800, the sale of public land to farmers was the way of installment loans. People who bought land only You need to make a 25% down payment first, and the remaining 75% will be repaid in three installments over four years."

Goodman plucked his hair, sighed, and continued:

"In addition to the "Harrison Act", installment loans were also very popular in the United States more than 1900 years ago. Especially in the auto-related industries. In 1929, there were no cars in the United States, but by [-], more than [-]% of American families They all had cars. Do you think people really had that much money to buy so many cars?"

Huh?Ah? ?
At this moment, Carter is a bit like Fan Xian showing off glass and cement in front of his father in "Celebrating More Than Years".Regardless of embarrassment or not, Carter was roaring in his heart: Since you guys have paid in installments a long time ago, why is the loan paid in one lump sum now?

"The invention of installment payments stimulated economic growth, but there is a fatal problem in it. It is excessive consumption. The money from installment loans is actually overdrafting the future. But people at that time were crazy, and they didn't realize it. Up to this point. I will lend you a thousand dollars, and I only need to repay one hundred a month. I still have nine hundred, and I can live on. Then I saw another product that I like, so I With a loan of one thousand, I still have eight hundred a month, so life is a bit difficult, and then I, do you understand?"

"This is the situation for customers, and for the merchants. Suppose I have a car factory now. I thought that there are not many rich people in my place. It would be good if I could sell [-] cars a month. So I just bought a production line and hired ten workers. Now suddenly three hundred people are waving money to buy a car, do you think I will sell it or not?"

It will definitely sell!For merchants, if someone buys it, why don’t you sell it?Think money is hot?
Having said that, Carter already understood.

It is nothing more than the existence of installment loans, which artificially increases people's spending power by a large margin.Then again, market demand determines market supply. When people demand more goods, factories can only increase production with all their might.

Buy more production lines, hire more workers, offer higher salaries to recruit people, and even in the process of expanding production, factories are also taking loans.As a result, one day, people suddenly realized that they already had a lot of loans. After the salary in the next few years excludes basic living guarantees such as food and drink, they will have nothing left after repaying the loans.

As a result, people dare not take out loans, and not taking out loans means that there is no consumption.What should the factory do at this time?The products produced cannot be sold, so many production lines are almost deserted, and there are still a lot of staff salaries to be paid.Ever since, the factory began to lay off employees, and this layoff was like a fuse that ignited the fuse leading to explosives.

In that environment, would the factory workers not get loans?Now that the job is gone, the loan is still there!
There are problems in life, where is the money to repay the loan?They have no money to repay the loan is the first step, and then the bank is dumbfounded.Because the bad debt rate has started to rise, and the loaned money cannot be recovered, what can I do to save costs?
cut!Then cut!Cut to death!
Under such a loop, more and more people are unemployed, and the more unemployment, the less consumer demand, and the more stores are closed, eventually forming a vicious circle.

Then in October 1929, from the New York stock market, the first shot of a total collapse was fired!Banks went bankrupt, businesses went bankrupt, a large number of people lost their jobs, their incomes were cut in half, their living standards plummeted, and public order almost collapsed.
With such a lesson learned from the past, who else would dare to engage in that kind of installment payment?Not afraid of 1929, do it again?
(End of this chapter)