2006-11-02 10:36:26 · 10 answers · asked by Janee L 1 in Business & Finance ➔ Renting & Real Estate
Yes, the government use to cap the interest rate. I believe lenders should charge higher interest rates for risky clients but 18 to 22 percent is out of control
2006-11-02 10:49:07 · update #1
I think it's to keep the poor people poor and the rich people rich.... Because that's exactly what they are doing...
It's like the opposite of a modern day Robin Hood. Their robbing the poor and giving it to the rich..
Then they try to say stupid stuff like it's for risky clients to cover their scam.. Like it's not covered by the insurance company. Oh please, Their going to get their money no matter what interest rate they charge, even if their client refuses to pay them back. It's called "INSURANCE"
2006-11-05 13:42:37 · answer #1 · answered by Angelica G 3 · 0⤊ 0⤋
The government does not allow lenders to charge high interest rates. The rate the lenders charged are based on how well you protect your credit.
The better you protect your credit and manage it as well as pay all your debts on time the better interest rate you will get because you are less of a risk to pay what you borrow back.
The less you protect your credit your interest rate will be higher because the lender is taking a greater risk that you will pay back this loan.
If you are a risk to pay back what you borrow you have to demonstrate over a period of time that you have changed your ways. When that has been demonstrated you can also get a lower interest rate on whatever your purchase, whether it is a car, credit card, a mortgage for a home or anything else you ask credit for.
The government set a rate that it will lend to it's best customers, but this is to the institutional banks and other lending institutions. These banks now have to determine if they are going to lose money lending to you are pretty sure they are going to get their money back.
I hope this has been of some use to you, good luck.
"FIGHT ON"
2006-11-02 12:06:13 · answer #2 · answered by Skip 6 · 0⤊ 1⤋
The DFI (Department of Financial Institutions) in each state is the regulatory agency for interest rates on consumer financing. There are some states that have no cap. Some do have caps.
Yes, another responder is correct that rates are in direct comparison to the risk factor of the borrower. Lenders that make loans to risky customers will generally realize high losses. That's an increase in their profit loss.
Do you realize though that (for instance) when rates are up & down in the banking industry - most consumer loan companies do not fluctuate? In our state for example, in the past 30 years I can only remember about 4 or 5 times that rates changed. Period.
Also - don't forget these lenders are borrowing the money they loan out. Their lenders know they loan to risky business and the interest they pay in also in direct relationship to their risk.
A genuine risk lender has a primary task of helping those with less than perfect credit to (re)establish their credit so that they can then return to the lower rates charged at banks and credit unions. Our mission is accomplished - but yet we lose a customer!
Usury laws vary from state to state. Check them out!
The moral of the story - pay your bills. Pay them on time. Be able to borrow money at the best rates available.
2006-11-02 12:56:07 · answer #3 · answered by chey_one 3 · 0⤊ 1⤋
The government can't control lender's interest rates. They only set the base interest rate. Many lenders will charge a high interest rate for risky clients - those that have a low credit score for example. It's a way of covering their risk as many of these types of borrowers will default on their loans.
2006-11-02 10:38:56 · answer #4 · answered by nljth123 3 · 0⤊ 1⤋
The problem isn't the government. It is the people that accept these loans. High rates usually go hand in hand with risky clients, low FICO, poor credit history, foreclosure, etc. If there was no demand for such a product it wouldn't be offered. Another reason people receive such high rates is because they do not educate themselves regarding their options.
2006-11-02 16:48:38 · answer #5 · answered by greenshirt 2 · 0⤊ 1⤋
Two different governments regulate lending the feds and the individual states the feds concern themselves mainly with truth in lending and although the individual states do also the states tend to regulate areas such as the interest rate that is the reasons for usury laws and other statutory provisions.
2006-11-02 11:22:07 · answer #6 · answered by newmexicorealestateforms 6 · 0⤊ 1⤋
you are obviously too young to remember to 20+% interest rates of the early 80's. Compared to other countries are rates are quite low. The government has little say in the matter really.
2006-11-02 10:55:31 · answer #7 · answered by Jim7368 3 · 1⤊ 0⤋
It's a free market. You don't have to borrow the money.
Do you want the government to tell you how much you can charge for something?
2006-11-02 10:41:39 · answer #8 · answered by savethemonarch 1 · 0⤊ 1⤋
Because like everything else, someone has to "Pay" for all of the people who do not pay their own bills! High Interest rates provide the cushion.
2006-11-02 10:38:41 · answer #9 · answered by educated guess 5 · 0⤊ 1⤋
Because they all make big money on the deal...........
2006-11-02 10:38:46 · answer #10 · answered by Scotty 6 · 1⤊ 1⤋