plagiarist 4 hours ago

What I don't understand is how they pay off the loans without triggering a tax event from liquidating capital to do so. Like the loans are always small enough to be paid using the low amounts of taxed income?

  • don_neufeld 4 hours ago

    Interest accrues, it's not paid.

    Then the debt is rolled over into a new loan for a larger amount.

    As long as the collateral increases in value faster than the interest rate, this can continue indefinitely.

    • rohan_ an hour ago

      what bank would finance this? this is such insane risk. as soon as the stock market hits a recession, the bank will call the loan, and the borrower will be bankrupt.

  • litoE 4 hours ago

    I would either renegotiate the loan or, almost equivalent, get a second loan to pay off the first one.