why do money banks want money from you for loans when the money they give to you is not even in their vault ?
In: Economics
The banks loan you money, with the promise that you will pay them back, plus extra later. If you don’t pay them back, they don’t make any money from the loan, which is the entire reason they loan out money in the first place. The bank may pay for something, like a car or house with loaned money on your behalf, and you have to pay them back or they take the car or house from you.
For some purchases, like a car or house, you may be required to pay some money up front in addition to the money the bank will pay through a loan, in case they are worried that you may not have enough money to pay them back, so that they still at least get some money from the deal.
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