Not my original idea but an important one. A loan officer who is getting paid back 97% of the time can probably assume that the more risky customers are already 95% or less. Bank officers usually know this, but others to whom this concept applies, often don’t.
No further explanation needed. All comments welcome.
I don’t even know how I ended up here, but I thought this post was great.
I do not know who you are but certainly you’re going to a famous blogger if you aren’t already 😉
Cheers!
I understand the concept, but wouldn’t this be counterbalanced by the condition that the borrowers with less income, assets, good credit history, co-signers, etc. would have paid charged a higher interest rate to borrow the money in the first place?
So 90% recovery for people paying 10% interest on a vehicle might be as good as 97% recovery from people paying 6%.