Why do not lend money directly to car buyer cutting out bank

Reference no: EM131021076

If you deposit $20,000 in a savings account at a bank, you might earn 1 percent interest per year. Someone who borrows $20,000 from a bank to buy a new car might have to pay an interest rate of 6 percent per year on the loan. Knowing this, why don't you just lend your money directly to the car buyer, cutting out the bank?

Reference no: EM131021076

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