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Comment by cwhiz | Hacker News Reader

The outcome of that will be that lending standards go up substantially. Significantly higher interest rates and required collateral. The eventual end result is fewer people able to qualify to buy a car, buy a house, get a credit card, or go to college. These are significant drivers of economic activity.

It's hard to put the genie back in the bottle.

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Offering debt as a way to finance regular life activities like school and housing is also a good way to paper over the other, equally serious problems we currently have in the US, an explosion in the cost of school and housing, compared to what people earn.

If people didn't have debt as a way to access these things, there might be more energy for addressing the income inequality and lack of class mobility we have, that's being obscured by the access to debt.

Neither side is necessarily wrong here but we changed the law to address the problems you describe.

I see this as similar to the payday lending debate. Payday lenders aren’t creating demand, they are responding to it. What happens when we eradicate that form of lending? Most things start from good intentions.

Those artificially low lending standards merely enabled loans that shouldn't exist.

This is true but we did it for a reason. Buying a car used to require 35% down, 12-24 month payments, and 10%+ interest.

The average price of a new car is around $30,000. What percentage of Americans can afford a $10,500 down payment and a $900 monthly payment? I’d guess less than 15% but it’s just a guess.

People shouldn’t be tricked into taking on tens of thousands of dollars in depreciation by committing to many years of monthly payments. Yes this system is good for car manufacturers, but no I don’t think that’s worth how much it ruins the finances of a good chunk of the country.

The genie has been doing a Fred Astaire number in cleats on the head of the sensible-economic-growth genie since about 2005.

It would be good thing in the long run. Yes there would be short trem pain, but we still should make they standards higher.

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