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[-] Ufot@hexbear.net 12 points 8 months ago

Loans are given out for 1 reason, to receive interest payments.

If he's making the interest payments, then they're going to keep loaning him money.

Lenders often make stupid decisions and risky loans but at its core, a loan is determined by two(three) things.

  1. Does the lender believe the borrower has enough income to pay the minimum monthly payments?

  2. Does the lender believe the borrower has enough assets, which if liquidated could pay off the remaining debt?

  3. Is it worth the risk?

I'm no finance expert and there's a lot of specifics between different types of loans that have different reasons. Like a personal loan, mortgage, car loan, business loan. Way more than that idk.

There's also reasons banks will or will not loan money that are a little more vibe based, ie racism, classism.

But the lenders, either correctly or incorrectly, have determined he has the income streams and the assets(sounds like he owns lots of property), that risking 1.2 bil made financial sense. A lot of thst probably is tied to real estate.

Having said all that holy shit that's a lot of money. Assuming he's paying only the interest at 3% apr that's $36,000,000 a year. Fuck.

this post was submitted on 19 Jan 2024
102 points (100.0% liked)

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