Safer Lending

The Bank of England crashed in 2008, leaving the citizens of Britain poorer. It started with banks giving out too many loans to people couldn’t afford to pay them back. Despite there being greater the reward for greater the risk, I don’t believe banks should lend money to people who will not be able to pay it back, as this is detrimental to everyone and it is especially unfair to those who did invest in banks and then lost everything when the market crashed.

It is my belief that this is a waste of money for the bank because if someone can’t pay the money back, the bank will lose more rather than gain more. For example, one person wants to buy a car for £6,000 and they presently do not have the money. The person earns £7.00 an hour. They then go to the bank requesting for a loan, but it is unlikely that they will be able to pay that £6,000 back, with only £7.00 an hour. I believe owning a car is a luxury, especially in comparison to something like buying food.

On the other hand, another person who also earns £7.00 an hour has a family of five. This person and their family currently live in a 2 bedroom flat and this person needs to provide £22,000 to buy their family a decent accomodation. They then go to the bank and ask for a loan. Should the bank still give them this money, knowing that it is highly unlikely that they are going to pay it back?

If the banks do not give loans to customers who cannot guarantee payment, they will lose a generous amount of profit, although this can be a huge risk, it is better for the economy as they will not be losing as much money, they will be gaining more money.

Therefore, it is my belief that in order to prevent another financial crisis the banks should be stricter with who they lend money to.

Comments (3)

  • Tiff-Avatar.jpg Tiff @ the BNC 29 Nov 2018

    I gave this post a star for open-mindedness. You've started to consider different situations and the perspectives of people who want to borrow.

    What support does the Government give to families who maybe couldn't get a bank loan?

    Reply to this comment
  • Elaine-logo-250x250.jpg victorious_snow
    Elaine Primary School 29 Nov 2018

    I actually agree with you because you are not saying don't give money at all but you're saying give it to the right person.This would be 100% true because money is vitally important to especially the poorer people.So their reason to lend money may be for an important reason but they are most likely to ask for a larger amount, then it'll be harder for them to return the money.
    When it comes to bank lenting money, the poorer people will surely ask for a greater amount because they are less likely to ask for little amount.Their needs,to full fill this opportunity,will be alot like having to buy a house or at least rent a house which require more money.

    SOLUTION
    A solution, based on other things going on around the UK, would be checking people's lifestyle and finding more information in great detail about them especially with money involved, before they give the money.For example,a well positioned person within our society would be able to return the money. Even a middle class family would have the ability to return the money because it is mainly about if they are going to a work and the type of job.And if you are not going to work then, it would be hard to trust and give the money to you.

    According to me, the government should help these type of people as this is not exactly benifitial but helpful for our country but what really would be benifitial is choosing the right person to lend the money to.

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  • Elaine-logo-250x250.jpg victorious_snow
    Elaine Primary School 29 Nov 2018

    Thank you for valuing my points which are an extension of the main post.

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