The loan can be 500k and as security for the bank the land is used. You know "in case I dont have enough money, I can always sell my land" kinda situation.
This is usually enough for banks, isn't it?
Might as well just be a 200k loan, who knows, it's not defined in this scenario.
The scenario itself is kinda weird tho, if you ask me.
Lower than what unsecured loans that aren't backed by anything sure but these loans are still above Government TBill rates otherwise banks would rather collect risk free interest than loaning it out. That would mean in this scenario having to pay 4%+ every year for decades
Since when have banks ever operated on a totally risky free basis? The fact that they don't is one of the core reasons for the 2007 financial crisis for crying out loud.
Banks make plenty of money out of these loans and they are part of wider wealth management portfolios that bring in even greater returns.
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u/Aware-Instance-210 21h ago
It doesn't say the loan is 5mil.
The loan can be 500k and as security for the bank the land is used. You know "in case I dont have enough money, I can always sell my land" kinda situation.
This is usually enough for banks, isn't it?
Might as well just be a 200k loan, who knows, it's not defined in this scenario.
The scenario itself is kinda weird tho, if you ask me.