92

They want to gauge the chance of a successful sale. There's nothing quite as frustrating when selling and moving to a new home as getting into escrow, doing all the paperwork, crossing off all the check lists, only to find out that your buyer didn't qualify for the loan and the mortgage fell through. By asking about your down payment (20% or more is often ...


78

You can lend at any rate you like. Finding a borrower is a different matter, as is ensuring that the borrower pays it back. Few banks will borrow from you at the Fed rate. Currently, rates on savings accounts are less than 0.5% and FFD target is about 2.5%. Plenty of customers still use the savings accounts in spite of this. These customers are your ...


68

Liquidity is about how easily something can be converted to cash not how much of it is circulating. So dollars (or other plausible currencies) are by definition the most liquid possible asset. There are plenty of relatively illiquid assets whose total value exceeds the amount of physical dollars in circulation. The total value of all real estate in the ...


59

I think the heart of the matter is that you're misinterpreting both what comprises a credit score in the US, and how they are used. This is evident in your second to last paragraph: A "credit score" in my country limits the extra debt you can take if you are already in debt. In The U.S. though, it seems that the "credit score" allows you to get even more ...


52

How did merchants verify the acceptability of a credit card back then? Nowadays, even every little rural general store seems to have a high-speed Internet connection that they use to instantaneously verify the customer's card with the bank. What prevented a 1980's bandit from going on a spending spree with a stolen, altered, or revoked credit card ...


49

To expand on riya’s answer... When the other driver is at fault, their insurance is the one responsible for covering any claims. You have 3 broad choices at this point: Pay out of pocket for your repair and skip any claims. Claim against your insurance, get your repair covered, and let them process the claim against the other person’s insurance. Submit a ...


46

The dealer makes money on the loan. The amount depends on the relationship between the dealer and the finance company. Basically, you getting a loan increases the dealer's commission and so you can indeed negotiate a lower price. The dealer may also have incentives to close x number of loans per month, so he could have additional motivations. He's probably ...


43

Can somehow add a layman explanation on how Americans can be so much in debt but have good "credit score" that allows them to borrow even more? A credit score measures the risk of not making monthly payments. That's all. Nothing more. If a creditor thinks you're a larger risk, they'll likely just demand a higher interest rate, or some form of collateral ...


37

Up to a certain dollar figure, the issuers indemnfied the merchant from fraud. Above that dollar figure, the merchant made a phone call into an agent-driven or automated system, and supplied your merchant ID, the credit card number and expiry. Soemtimes, the agent would ask you to hand the phone to the customer. If approved, you were indemnfied. If you ...


29

When you pay points on a mortgage, you're paying to offset interest. The payment is essentially a fee, and does not decrease principal. In your example, if you pay $1,000 against a $100,000 mortgage, you're paying one point (one percent of the mortgage amount) and you're getting a .25% discount on interest as a result. You still owe $100,000 in principal. ...


29

Buying Treasury Bills is loaning to the U.S. government. The 4 week Treasury Bill with an issue date of 8/27 got a 2.098% investment rate. The 13 week Treasury Bill with an issue date of 8/29 got a 1.992% investment rate. Individuals can buy Treasury Bills, without any fees, through a Treasury Direct account .


26

One aspect that may not be obvious from outside the US is the prevalence of medical debt. A quick Google shows that about 2/3rds of bankruptcies are due to medical issues. The easiest way to end up $100k in debt is to find out you have cancer. While putting people into crippling debt because of medical issues is messed up, denying life-saving care to people ...


21

Stores didn't verify cards. If the card wasn't expired, they used it. At best they might ask for a driver's license to match the name. If they were particularly worried, they could call the bank to verify the account. In other words, the same way they accepted checks. As noted by The Photon in the comments, many (maybe even most) stores didn't accept credit ...


20

How can you get more loans when the ones you already have are way over what you can ever pay back? Credit scores don't exist to help the consumer; the exist to help the lender. A person who will never pay back their loans can be a fantastic investment. The poor debtor still has to eat, so they will get a job. The court system will then let you garnish ...


19

If the appraisal is less than the purchase price and the down payment is small, the bank might not approve the mortgage.


14

You asked, Is this a scam? The answer is yes. It is a scam. There are many scenarios that may be playing out here: The iPhones are stolen. The scammer is legitimately interested in obtaining them, but they do not want a paper trail linking them to the stolen goods. So, they get you to wash the money for them. Now, when the FBI starts tracing things ...


14

In the U.S. though, I see people making 20K an year but have credit card debt of 90K. How is this possible? You don't see that. I don't know what sort of fear-mongering sympathy extracting nonsense you've seen on the internet, it is not common at all for someone earning $20k to have $90k of credit card debt. In fact, at $20k of income a normal limit would ...


13

I noticed that the interest rates on savings accounts are significantly higher than those of checking accounts. Why is this the case? Balances in savings accounts tend to be maintained for much longer periods of time (both by choice, and by restrictions on transactions), so the bank doesn't need to keep as large a reserve and can loan out more of the money, ...


11

Wholesale vs retail For pretty much everything, including loans, the wholesale price is different from the retail price. It is unreasonable to expect the same price when buying a can of Coca Cola as the price you could get when buying a truckload of the exact same cans. It is unreasonable to expect the same price when buying a pound of grain as the price ...


10

It's important to note that there can be lots of variations in a given, specific scenario. Dealers may behave differently on different deals over time, and there may be specific reasons behind that which we will never know. That said, speaking generally, the biggest reason why dealers prefer finance for some cases is when they are getting a kickback from ...


10

Disclaimer: this is how such things work out in my experience in Germany. US may be different, but my answer may nevertheless give you some ideas what to ask. Ask your insurance how to proceed. (if it's purely the other side's fault, see the other answers: that's nothing to do with your liability insurance) I'll tackle this part, which is relevant only if ...


10

Yes, you can decrease your tax burden by suffering business losses. The only expenses you'd be claiming would be actual spending you do. So, if you spend $100 in advertising and have $0 revenue, you have $100 in losses which saves money on taxes but costs you money in total. The exception to this is home office expense, since you are already paying rent. If ...


9

The bank would usually give the money to the dealer directly, possibly via a check you give to the dealer as payment. Ask your bank, they can tell you how they do it. It's exceedingly unlikely the money will ever go through your personal account though. Depends 100% on your bank, you'd have to ask them. It's paid off however your contract says it's paid off. ...


9

There is no universal answer. Every company is free to set their own terms. Check the fine print or contact the company. Usually, companies are smart enough to avoid those situations. For example, if you sign up for a "Buy One Get One Free" deal, you can't return the paid one and keep the free one. You should also consider whether or not return shipping ...


9

One part of the reason is that bad credit scores do not stop people from getting loans, it just means that they'll pay higher interest rates. At the lower end, they may resort to predatory lenders. From the point of view of such a lender, having the loan repaid is almost the last thing they want. They'd much prefer you to just keep paying the (very high) ...


8

A personal story, previously shared in an answer to another question: For the last house I sold, the buyer was doing a no-money-down mortgage and had no money for a down payment. He was even borrowing the closing costs. We accepted the offer, but when the bank did the appraisal, it was short of the purchase price. For most home sales, this would not be a ...


8

Because, ultimately, the seller is likely going to have multiple offers for the house and will have to decide which to go with. In that situation, one of the most important weighing factors is: how likely is the seller going to manage to get to the finish line? Because there's actually a really long time between when an offer gets accepted and when the ...


8

The Roth IRA contribution income limit is based on the current year (2019)'s MAGI. If you are not sure whether you will be over the limit or not, you can 1) wait until January 1 - April 15 of 2020 to contribute to Roth IRA for 2019, or 2) do a "backdoor Roth IRA contribution" (assuming you have no money in pre-tax IRAs). If you have already contributed to ...


8

Depends on the store and conditions for the discount. As an example the grocery store occasionally has sales like this and require return of all products for a refund. For example, if 12 packs of Coke are on sale for "4 for $10 - must buy 4", the receipt will say "all items required for return". Sometimes the sale doesn't have the "must buy 4" requirement ...


8

Shouldn't the “credit score” prevent Americans from going deeper and deeper into personal debt? The credit score is often used as a indicator of financial risk as @RonJohn stated. Here is where it gets perverted in US Financial... Banks know low income folks and others with low credit scores are riskier, so they still make the loans but at a higher rate. ...


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