There's a difference between "Show us how much you have, we will give you more until you have enough" and "Show me how much you have, we'll raise prices until you can barely afford it with a high interest loan."
That's not how prices are set. Just because I can borrow $X thousand dollars on my credit doesn't mean I go ahead and purchase all the big screen tvs and computers I want. Just because I can borrow $XX thousand to purchase a car doesn't mean I'm driving around in a new mercedes. Just because I can borrow $X million to purchase a house doesn't mean I will purchase real estate which will turn my net accrued savings to 0.
When people only think short-term (what's can I afford monthly) vs. long-term (what will I pay out over the life of the loan vs. what I'm getting now) they make mistakes. These mistakes are self-inflicted but these people tend to then blame any and all others for why they can't get ahead, why the system doesn't work, why the American dream is dead :).
There's a borrowing limit. Something like $7k a year. So if you wanted more people to take these loans the first thing to do would be to raise the limit.
I have seen so many people fall victim to these tactics. It's never "what can you afford?" but "tell me what you want and we'll work something out". And next thing you know a 22 year old with zero financial or life knowledge is stuck with a 8 year 33% APR loan for shitty used truck that will need thousands in repairs every year.
The deposit doesn’t matter, what matters is the total loan amount.
For a £500K flat you need a £50K deposit but you also need a household income of £100K or more to be able to borrow £450K as banks cap the maximum amount they’ll loans at 4-4.5 of your annual income.
So HTB didn’t only increase the prices it also pushed people to take on loans that they normally would not be able to afford.
Probably because the people wanting to loan the money don't think the people wanting to borrow the money are going to be able to pay it back, so they're charging larger interest rates to compensate them for the risk. That's really all the interest rate is.
I'm primarily talking about grants, not loans, since that's where the price discrimination is clearest. They're effectively setting the price at exactly what they calculate you can pay.
I wonder why you still managed to use the term "loansharks" when trying to defend their quite obviously predatory business practices.
"Higher interest rates" doesn't even begin to define the exploitation of these people who are desperate for cash. The rates for these loans are on the order of 400%, which makes the comparison laughable.
It's almost like saying "the US national debt is $22 trillion, which is more than the average American makes in a year."
Wouldn't that necessarily force them to raise prices or cut payments or leave them with less money to lend? I mean, it has to come from somewhere, right?
Never trust a money-lender who says they want people to borrow less. They just want more people to borrow the same total amount, to change their own risk profile.
Because as a lender I don't want to give someone money to buy xyz when they have a history of not making their payments. I don't think this analogy works.
Regarding your point about the lending vs borrowing:
The use of the word "encouraged" makes sense to me. If people are "encouraged" to lend vs borrow, that means they will have more desire to lend vs borrow. This has an important effect on the supply vs. demand equation. Supply of loans, ie. people willing to borrow, goes down and the demand, ie. people willing to pay money now for interest later, goes up, causing prices (interest rates) of loans to go up (down).
In other words even though every dollar lent must be a dollar loaned, people's willingness to lend affects supply and demand.
Well, I definitely have an inordinate ability to repay. But the newer lenders, unlike the older lenders, aren't acknowledging that for whatever reason. Maybe they only want the high rate business?
Yup, this seems kind of predatory. Instead of honestly answering what the interest rate is or give an equivalent they wave it away with jargon. Answer after answer is just jargon and more jargon. They don't even show what the total amount paid back is! They instead show very clearly they keep drinking your sales until they decide to stop.
All time high prices and rising interest rates for new loans should tell everything. If you have even basic understanding how average people are estimated for their capacity of taking loans.
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