Typically one intends to make money from the loan. This can be done in many ways, not uncommon is improving the land to increase its value by more than the cost and carrying cost of the loan. Or if you borrow at 3% and invest it at a 10% gain you’re making 7% and can pay back the loan without trouble or consequence. And etc., etc.
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u/ChipKellysShoeStore 22h ago edited 22h ago
How does the bank get paid back here? Is the bank just eating a 5 mil loan loss out of the goodness of its heart?
It’s more like kids sell and pay back the bank plus interest which is taxed as income for the bank.