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| It is the fine print that gets you.
I currently am in charge of some loans made to others using standard wording. I can call the loan any time they are late with a payment. If I do not like the insurance they are carrying I can call the loan. I can call the loan if I FEEL the equipment value is less than the loan amount. I can call the loan if they do not maintain the equipment to my satisfaction. I can call the loan if some of it disappears.
Obviously I would rather they just make their payments as I do not want to be chasing equipment down. The interest rate isn't great but we are not going backwards.
Now put yourself in the situation where you loaned the money at 4% fixed. Borrowed the money short term at 3%. Now your interest is 5% and you are being hounded by investors demanding their money.
What are your options? What are your options if a bank examiner is coming and you do not have enough assets to cover everything.
Paul said it better than I did.
Edited by IADAVE 3/23/2023 16:24
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