Anybody notice this?

[Anonymous]

Banks are weird. 

Has anyone noticed how they're willing to extend us TONS of unsecured credit with almost no documentation,

but to get any, even secured, credit, such as a loan or mortgage, you have to have 500 years of taxes and income statements and a bunch of other stuff!

I'm not complaining, i just think it's funny. I had a customer come in and say that USAA wouldnt give him a 24 month auto loan for $15k, but they would gladly give him a credit card with a $15k limit and even extend a 0% apr period! 

Its crazy how they work, but im not complaining!

[bdhu2001]

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@Anonymous wrote:

Banks are weird. 

Has anyone noticed how they're willing to extend us TONS of unsecured credit with almost no documentation,

but to get any, even secured, credit, such as a loan or mortgage, you have to have 500 years of taxes and income statements and a bunch of other stuff!

I'm not complaining, i just think it's funny. I had a customer come in and say that USAA wouldnt give him a 24 month auto loan for $15k, but they would gladly give him a credit card with a $15k limit and even extend a 0% apr period! 

Its crazy how they work, but im not complaining!

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When they loan you 100K+ or 15K+ for a car or house, it's not anticipated that you'll be able to pay it off in one year & they can't rescind the credit because they have second thoughts (Also the money was paid to a third party so that can't get decrease their risk by closing the loan).

When they give you a 15K credit limit on a card, you don't owe 15K you simply have the possibility of owing 15K.  But if your spending and payments are off or you start charging huge amounts and they feel antsy, they can close your credit card. In addition car loan and Mortgage loans traditionally have a lot less turn over and have lower interest rates than credit card. Oh I just thought of something else, there is no caveat that if you pay late on your mortgage or car they can change your interest rate for the life of the loan. However, they can change the rate on credit cards.

[Anonymous]

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@bdhu2001 wrote:

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@Anonymous wrote:

Banks are weird. 

Has anyone noticed how they're willing to extend us TONS of unsecured credit with almost no documentation,

but to get any, even secured, credit, such as a loan or mortgage, you have to have 500 years of taxes and income statements and a bunch of other stuff!

I'm not complaining, i just think it's funny. I had a customer come in and say that USAA wouldnt give him a 24 month auto loan for $15k, but they would gladly give him a credit card with a $15k limit and even extend a 0% apr period! 

Its crazy how they work, but im not complaining!

---

When they loan you 100K+ or 15K+ for a car or house, it's not anticipated that you'll be able to pay it off in one year & they can't rescind the credit because they have second thoughts (Also the money was paid to a third party so that can't get decrease their risk by closing the loan).

When they give you a 15K credit limit on a card, you don't owe 15K you simply have the possibility of owing 15K.  But if your spending and payments are off or you start charging huge amounts and they feel antsy, they can close your credit card. In addition car loan and Mortgage loans traditionally have a lot less turn over and have lower interest rates than credit card. Oh I just thought of something else, there is no caveat that if you pay late on your mortgage or car they can change your interest rate for the life of the loan. However, they can change the rate on credit cards.

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all good points. but in the case of $15k on an auto loan vs $15k on a credit card with 0% interest, if there is complete default, there is no way to recoup losses.

[Anonymous]

And many mortgages are sold to other people. Which means they have some due dillegence requirements. 300k for30 yrs at 3.5% requires a lot more faith than than 2000 for a couple years at 19.99%. If you pay for a year on that 2grand and default they are out far less than if you pay your mortgage for 12 months and default. Plus defaulting on that mortgage, they will recoup some of the money when the house is resold, but not enough, and depending how long it takes, they may have significant costs for maintainace etc.

[bdhu2001]

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@Anonymous wrote:

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@bdhu2001 wrote:

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@Anonymous wrote:

Banks are weird. 

Has anyone noticed how they're willing to extend us TONS of unsecured credit with almost no documentation,

but to get any, even secured, credit, such as a loan or mortgage, you have to have 500 years of taxes and income statements and a bunch of other stuff!

I'm not complaining, i just think it's funny. I had a customer come in and say that USAA wouldnt give him a 24 month auto loan for $15k, but they would gladly give him a credit card with a $15k limit and even extend a 0% apr period! 

Its crazy how they work, but im not complaining!

---

When they loan you 100K+ or 15K+ for a car or house, it's not anticipated that you'll be able to pay it off in one year & they can't rescind the credit because they have second thoughts (Also the money was paid to a third party so that can't get decrease their risk by closing the loan).

When they give you a 15K credit limit on a card, you don't owe 15K you simply have the possibility of owing 15K.  But if your spending and payments are off or you start charging huge amounts and they feel antsy, they can close your credit card. In addition car loan and Mortgage loans traditionally have a lot less turn over and have lower interest rates than credit card. Oh I just thought of something else, there is no caveat that if you pay late on your mortgage or car they can change your interest rate for the life of the loan. However, they can change the rate on credit cards.

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all good points. but in the case of $15k on an auto loan vs $15k on a credit card with 0% interest, if there is complete default, there is no way to recoup losses.

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I'm not saying that they can recoup losses on a credit card.  I'm stating that having the CL isn't the same as instantly owing the money.  Thus, they can cancel your credit car before you charge it up the CL to reduce their exposure.  Reducing their exposure isn't an option for home and auto loans.  Once they've loaned the money, their risk is the full amount.

[Anonymous]

I understand that. But if you charge it completely, then they can't decrease exposure until it's paid off.