Retail Lending
Alternatively, a lender of last resort is a bank, cheque cashing store or credit card operation which deals only with the highest risk categories of private client. These retail banks charge very high rates of interest to cover the high credit risk they face since many of the loans are not repaid. They therefore only attract customers unable to secure credit at lower interest rates elsewhere.
This term can be applied to criminal loan sharks who act as lenders of last resort, offering loans at interest rates so high as to be considered usury. This may be illegal in itself, or involve intimidation to ensure repayment.
These moneylenders are not the only lenders of last resort dealing with the public. In some cases, credit is available for the purchase of specific goods which could not be sold for cash. Particularly in car financing, there are large companies specializing in the arrangement of credit for high risk individuals.
Read more about this topic: Lender Of Last Resort
Famous quotes containing the words retail and/or lending:
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—Barbara Ehrenreich (b. 1941)
“If there is among you anyone in need, a member of your community in any of your towns within the land that the LORD your God is giving you, do not be hard-hearted or tight-fisted toward your needy neighbor. You should rather open your hand, willingly lending enough to meet the need, whatever it may be.”
—Bible: Hebrew, Deuteronomy 15:7,8.