Finance Rates

[Enemies]

Originally Posted by TheJuggernaut

You're assuming that they're lending you cash from a vault but no bank is stupid enough to do that. Paper money that sits on its own devalues to zero long term. All of their cash (minus whatever they're required by law to keep on hand) is tied up in higher yield investments than anything you'd ever pay, except maybe your credit card. What they loan you is what they borrow from the government. So as long as the difference in what they charge you is enough to cover the interest they pay the government (which I think is 1% right now), any of their overhead costs plus whatever income they wish to net, that's what you can hope for. Anytime you hear 0% or 0.9% financing, someone is pulling your prick. A lot of times, they'll offer "cash" discounts or 0.9% financing. All that really means it's that they're taking off the interest revenue they added to the price of the car, which they would have otherwise earned by financing at a normal rate (so they are actually still charging you the same rate).

Banks can actually loan out 10x more money than they actually have. If you have $10,000 in a savings account, your bank is using that $10,000 to borrow out $100,000 to other clients.

Banks lend out money they don't actually have. If everybody tried pulling all their money at once the whole fiduciary system would collapse. Our money system isn't backed by anything.

Trust me, even if they finance at .9% they aren't losing money on you. Unless you consider they could be financing that same amount at 3.9% to somebody else which is obviously in their interest to do.

I would really suggest that everybody do a little research on the financial system before they refinance a big purchase like a house.

[TheJuggernaut]

Originally Posted by Enemies

Banks can actually loan out 10x more money than they actually have. If you have $10,000 in a savings account, your bank is using that $10,000 to borrow out $100,000 to other clients.

Banks lend out money they don't actually have. If everybody tried pulling all their money at once the whole fiduciary system would collapse. Our money system isn't backed by anything.

Trust me, even if they finance at .9% they aren't losing money on you. Unless you consider they could be financing that same amount at 3.9% to somebody else which is obviously in their interest to do.

I would really suggest that everybody do a little research on the financial system before they refinance a big purchase like a house.

Conspiracy theories aside, I just said that banks lend out money they borrow from the government (Bank of Canada), not from deposits. Deposits are invested. And they're not legally obligated to have 100% of their deposit debits available for immediate return, any more than they can demand that you pay back every penny of your loans within a day. If I remember correctly, by law they're only required to keep enough cash on hand to cover up to 50k of anyone's deposit, and I believe this is also federally insured (a necessary thing for back when bank robberies were a real problem).

If I can invest money at 10%+, giving it to you at 0.9% is very much losing money, unless I'm also making 10% on what I'm loaning you money to buy. This is disregarding the fact that maintaining your account takes money (if you saw what it takes to process your cheque, you'd wonder how they're still in business if that's all they did), and there are also the odds that you'll screw me (ie actuary underwriting).

[Enemies]

Originally Posted by TheJuggernaut

Conspiracy theories aside, I just said that banks lend out money they borrow from the government (Bank of Canada), not from deposits. Deposits are invested. And they're not legally obligated to have 100% of their deposit debits available for immediate return, any more than they can demand that you pay back every penny of your loans within a day. If I remember correctly, by law they're only required to keep enough cash on hand to cover up to 50k of anyone's deposit, and I believe this is also federally insured (a necessary thing for back when bank robberies were a real problem).

If I can invest money at 10%+, giving it to you at 0.9% is very much losing money, unless I'm also making 10% on what I'm loaning you money to buy. This is disregarding the fact that maintaining your account takes money (if you saw what it takes to process your cheque, you'd wonder how they're still in business if that's all they did), and there are also the odds that you'll screw me (ie actuary underwriting).

Conspiracies and fact are two very different things. Deposits are invested. Loans are investments. They are one in the same.

I believe in Canada your bank account is insured up to $100,000. If the bank collapses and you had $80,000 in it, you'd get all $80,000 back. If the bank collapsed and you had $1,000,000 in it, you'd get $100,000 back. This is why most people with huge amounts of wealth spread it rather than keeping it one place. Although most people aren't stupid enough to keep large sums of cash sitting in a savings account. But you get the idea.

The bank doesn't have to provide you with all your cash immediately when it's called upon but they do have a set amount of time to get it for you. There were people trying to collapse banks years ago by trying to organize a run on certain banks (which I'm pretty sure is illegal) but anyway, they all failed. You would need a huge percentage of people to be able to do it and even so, it's a horrible ideal to try to collapse your own bank. I think people just wanted to show that the system is flawed.

Part of the chequing system includes NSF Fees (not only the fees charged to the person who wrote it but also the person who received it), and the Overdraft charges that result from said cheques. Trust me. Even if the bank was only in the process of allowing people to write/cash cheques they would still be more than breaking even. And even so, the statement makes little sense because they do in fact do more than just run a chequing system so the point is moot.

Anyway, sorry for hijacking the thread. Carry on!