Are Good Loans Going to Bad Schools?

Unless they are pressed by the government to do otherwise, as they sometimes are in considering mortgage loan applications, private lending institutions look hard at two factors before making loans.

First, the borrower’s ability to repay the loan is considered. Second, the value of the product or service the applicant intends to buy is considered. One reason for that is to ensure that adequate collateral is being provided. Another is that if the product or service turns out to be a lemon, the borrower is less likely to repay a loan taken out to buy it.

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