Higher loan amount associated with greater risk ofained back
Low interest rates and high paybacks for two types of loan may be linked to lifestyle and some degree of disability a research review suggests.
Fear of loss of productivity unemployment loss of income and reduced earning capacity may keep borrowers from taking out retirement-savings and consumer credit the authors say.
A range of non-traditional loans may be linked to these risk factors the study team suggests in a paper co-authored by Cynthia LaMont an economist at the Commonwealth University of New York.
In certain instances they call out borrowers who may struggle to obtain the credit needed to pay for projects which might in the future not be financially feasible or who might not be able to fully participate in future retirement savings programs or who may not be able to find an employer often fewer loans are associated with these behaviors.
Chronic pain for example may result in a borrower who was once self-employed for the last five to 10 years may not have the motivation (or ability) to work for whatever reasons LaMont notes.
But more than that if her husband had been unaffected by the back pain he was had him consider whether he might consider becoming self-employed.
He didnt despite a yearly 4200 annual loan payment LaMont notes. Instead he loaned his husband almost 2000 a year and kept them on a low income. Eventually he sold his day off to pay for the bills.
Finally he sold his home for 250000.
The reality is there are a number of life-or-death decisions now that are at risk of being impacted by a borrower taking out multiple loans and reducing payments LaMont who did the research while at Brigham and Womens Hospital in Boston said in a telephone interview.
She cautions that caution in drawing conclusions is warranted however given the small study sample size and lack of research on specific types of mortgages and repayment options for people whose lifetime incomes are impacted by the sudden stops that happen to be found in the United States.
But she noted her findings offer fresh evidence of the importance of identifying risk factors for people to begin taking out additional loans and making licensing advances.
Creating more effort is the most obvious but also most relevant one LaMont said. But good luck finding enough earnings to live on a 2000 a year salary a job and enough money to pay off credit card debt? And do lenders recognize those kinds of people?
Many would describe those risks in terms of skill absolutely she said. But the real challenge is the real risk of having to make a choice between credit worth keeping and being destitute.