Recent Comments

1. over 4 years ago on Pearls Before Swine

   Why are interest rates higher for student loans, compared to home, home equity and car loans?

   When you default on your mortgage, a lender can foreclose and sell the property. This means the risk of losing money due to default is pretty low.

   When you default on your home equity loan, a lender can foreclose and sell the property (taking second position to the original mortgagee). This means the risk of losing money due to default is a little higher than the original mortgagee, but still pretty low.

   When you default on your car loan, a lender can repossess and sell the car. This means the risk of losing money due to default is higher than real estate, but still pretty low.

   When you default on your student loan, a lender can . . . what? Maybe, if they’re lucky, garnish your wages. But it’s a long, hard wait.

   So, ask yourself. If you were lending YOUR MONEY out, for which purpose would you be most likely to lend it? The safest loan, or the riskiest? In the credit market, the interest rate goes up with the level of risk. The safest loans are to the federal government – treasury bills, for example, paying just above 0%. Risky loans, like credit cards, can be 16% or more. This reflects the difference in likelihood of receiving repayment – just like mortgage, auto loan and student loan lenders.

   Please, please, understand the math and the simple rules of finance.

2. over 11 years ago on Frazz

   In other words, the neighbors are shooting fireworks to celebrate not the American revolution, but the FRENCH revolution. And like the American one, the French one is celebrated on a day that marks the START of the revolution (July 14).

3. over 11 years ago on Frazz

   July 14 = Bastille Day = the “start” of the French Revolution.