Episode 118: Household Debt: The Good, the Bad, and the Politicized
Words & Numbers
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The Importance of Interest Rates
The more risky you are, the lower your income is. The less of a track record you have in repaying debts, the more apt you are to borrow money for something that is consumption versus investment. And so the lender is going to charge a higher interest rate. Why? Because there's a greater probability that you're going to walk away without repaying what you borrowed.
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