Bank loans - Good or Bad?

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I suppose this is one one of the first things that come to your mind when you are in need of help, but is it actually good to?

Really, this is all to do with risks:

When the banks lend the money, they are taking a risk, as they do not know for sure whether or not the person recieving the money is going to pay it back. So they are wrongly relying on them to do so.

At the end of the day, the greed of getting more money takes over bankers, so they are prepared to take the risk, providing they get more (interest); they do not think at first what will happen if the person does not or is not able to pay, nor if they are starting a financial crisis, just the lovely thought that they are getting more money!

There is an ethical side to it as well:

Say that person cannot pay, there is a 50% chance that they are going through tough times; losing their homes or busineses, and, aside from the immense loss, emotional, psycological effects; social embarassment; depression.

It's Good because...

this helps you to accomplish stuff in life, and to do stuff: in one clip of Personal Stories we watched today, the girl bought a house, and she had wanted to do it for a long time now, and she was able to with help from bank loans.

If you wanted to start a business, but only had a certain amount of money, the bank could help you with that, and it may turn out to be a successful business. This also is to do with the above: accomplishing stuff in life, because, again, in Personal Stories, Kamran wanted to be a barbar, and, with the help of bank loans, has done exactly that, now having numerous shops.

However, it's bad because...

if someone cannot, for whatever reason, pay it back, that is causing the bank to lose money, and this is how the Financial Crisis of 2008 started; people not paying back substantial amounts of money.

Again relating to the above not paying back, this then stops the bank loaning certain amounts of money to others, because you have taken that away from them. Banks aren't MADE of money, they rely on people's responsibility.

I think that...

you should only borrow money if you know that you can most definately pay it back. However, it is not only the non-responsible people's fault, however much it is, because the Bankers' Bosses should have set dtricter rules, and personally be monitering what the bankers are doing. They could make new rules such as:

  • Only lend a certain amount of money; boundries; a limit
    • If they have a relatively close amount (to the borrow) of money in their bank account ( maybe a few 1,000s off), then this is when you can lend, as you are certain they can pay it back, as they already have this much, they can build on it.
    • there should be SOME consequence if you can't, or won't, pay; someone might purposefully not pay back, despite the fact that they have perfectly the right money. (As I'm writing this, I'm quite sceptical, as what happends if they are genuinely poor? Should bankers check their accounts before confronting them?)
    • Simply ask them multiple times: Are you certain you can pay this amount back? Are you sure?

So that was my opinion and I'd love to hear yours! Feel free to challenge me on this!

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