oops, guess that poll question range was too wide, not specific enough

[netmouse]

For those who answered (some form of) Yes, a certain loan interest rate seems excessively high, the majority responded that "too high " starts between 5 and 25 %, and I'd like to see a breakdown on that. Please answer this question too!

[Poll #1343223]

Comments

[nicegeek.livejournal.com]

Presuming you mean ARMs, I'd tweak the statement slightly to say that they've been used by evil (or at least amoral) people to exploit people's ignorance. The ARM itself is just a financial tool; it means that the borrower takes the risk/reward of interest-rate changes instead of the lender, and is (or should be) compensated for that risk by getting a lower rate than a comparable fixed-rate loan.

ARMs make sense in two cases:
1) The borrower plans to pay off the loan before the rate adjusts.
2) The borrower believes that interest rates will fall (or at least stay level), and is effectively making a bet on it.

I have a friend who only borrows with ARMs. But he's very financially savvy, and wealthy enough to pay off the mortgage if he needs to; he only has it so that he can use the money to buy other investments.

The evil came in when unscrupulous lenders sold ARMs to borrowers that clearly weren't appropriate for them. And ended up bringing most of our economy down as a consequence.