Quote "If a financier agrees to finance or lease a new or used aircraft without adequate equity, collateral or security they
deserve the losses that inevitably result." (bold added)
what a statement.
if every bank thought like you, almost NOONE would get a loan. Ever heard of risk/reward? Simply its like this...high risk / high reward, low risk / low reward. Thats why home loans are 'low' risk and therefore the int banks earn is lower...coz in theory banks will always be able to recover their investment. However, when Mr dodgy fronts up with a proposal to lease 5 clapped out old C172s, what int rate do you think they give him (sufficient to cover their risk)? Thats why personal loans attract much higher int rates than secured loans etc etc. (and loan officers get nice bonuses which are theoretically linked to bad debts, not always the case though).
The bank has to accept an element of risk in the transaction..every transaction and charge higher interest rates for it. Otherwise, anyone going for a loan (even a small one) would probably require:
- 40% deposit
- personal guarantee secured by a term deposit
- 25% interest rate
- yada yada yada
Make sense?
*edit* - just re-read - no offense intended by the tone above..just how I wrote it.
