$1,000,000 Loan?

Opinion

kiermcgovern wrote: »

Don't really have anything I can use. Seems there's a lot of people playing funny !!!!!!s, I'm just a young person who wants to actually do something with my life and who works hard. nothing wrong with that..

How exactly is borrowing money and leaving it in a savings account hard work?

kiermcgovern

Opinion wrote: »

How exactly is borrowing money and leaving it in a savings account hard work?

The fact that I work over 45 hours a week in a kitchen is hard work... Not even going to argue on a money forum so rediculous

worried_jim

I think the OP has spent too long in the Outback playing with his didgeridoo. I suspect that when visits his local ANZ branch they won't give a xxxx for his application, in fact it will go straight down the dunny.

dealer_wins

OP with your obvious naivety, I would suggest you focus your career on manual, unskilled work.

redpete

kiermcgovern wrote: »

I'm 18 years old and I have a steady income. The reason I want this is to sit it in my savings account because I get 5% return per year. I wanted to take out the loan and pay back whatever me and the lender agree on as the monthly payment and just use the extra lets say 1k a week to help me with getting myself a car, ect. Is it possible though? And how would I go about asking for such a big amount. And by keeping that 1M in the bank I can pay the remaining of whatever I owe in so many years.

Do you realise that if you borrow money you pay interest to the lender. This is highly unlikely to be less than you would receive on the same amount of money in a savings account. You will also pay tax on the interest you receive.

Also, of course, no-one will lend that amount of money to a youngster in a low-paying job with no security.

waamo

Interest rates on personal loans are about 14% in Australia.

Based on this I think there may be a slight flaw in your cunning plan.

adindas

kiermcgovern wrote: »

My australian savings account gives me 5% interest but I just saw what fwor said.

Now it is becoming clear that you are just a naive teenager who dream of becoming a millionaire. I am saying this because it is so naive if you think you could make money from saving into non sterling currency with just 5% interest rate.

If making money is so simple like the way you think then many of regular members of MSE here is already very rich by now. People here are using a more delicate way then the way you do but still earning a pittance from stoozing.

Ok just to open your mind.
You could not compare the saving in non sterling currency and saving in GBP because
- The exchange rate fluctuate all the time. If the exchange is in your favour then you win otherwise you loose. So it is a sort of gambling if you do not do a deep research.
- Not to mention any time exchange involved there will be a fee involved.
- The interest you get in saving is taxable, so deduct again this gain from interest from tax.
- If you count all of that you will need around 10% margin (say) to make a reasonable profit. The country need to have a low inflation rate and relatively stable. AU$ meet this criteria, not the country such as Syria.

Discussing this is pointless as there is no lender in this universe is going to borrow you money in the way you explain. The exception of course if the bank belongs to your dad .....

Now the dream is over,
Time to wake up boy, time to face reality .....

If this is what you want to do in the future (not now). Here is a better proposal. Study finance at the top university. Upon completion your study try to find job in the Investment banking. If you get a job in investment banking then you have am opportunity to demonstrate your knowledge in currency trading. It is better because here you do not need to gamble your own money but you are gambling other people money. It is much better is not it ???

snootyjim

I don't know how much exposure you've had to this sort of thing, but to try to explain the situation as clearly as possible:

Banks are careful about who they loan money to. If they loaned you $1m, there's nothing to stop you spending the whole lot on a yacht and disappearing to an island somewhere, and never paying back a penny. You might claim that you're going to put it in a high interest account, or whatever, but what's to stop you withdrawing the entire lot?

If anyone wanted a $1m loan, the bank would expect something in return, i.e. a claim on your house, or a valuable painting, or anything, which guarantees that no matter what they'll get at least some, but ideally all, of the money back.

So that's your first problem. No-one's going to lend you that kind of money unless you can give them some kind of security.

Your second problem is that the maths probably don't work out. Banks lose money on savings accounts, paying out interest, and earn money on loans, charging interest. It is highly, highly unlikely that you'll find yourself in a situation where you can get a loan at a lower interest rate than your savings, excluding minor promotional deals (i.e. a bank account that pays a high interest rate on the first $5,000, or a credit card offering 0% interest for 12 months). If you think about it, if bank A offers 5% interest, and bank B wants to offer out loans at 3%, then your plan might just work. But bank B would be much better off giving their money directly to bank A than giving it to you.

So, either way, it wouldn't work.

boo_star

snootyjim wrote: »

I don't know how much exposure you've had to this sort of thing, but to try to explain the situation as clearly as possible:

Banks are careful about who they loan money to. If they loaned you $1m, there's nothing to stop you spending the whole lot on a yacht and disappearing to an island somewhere, and never paying back a penny. You might claim that you're going to put it in a high interest account, or whatever, but what's to stop you withdrawing the entire lot?

If anyone wanted a $1m loan, the bank would expect something in return, i.e. a claim on your house, or a valuable painting, or anything, which guarantees that no matter what they'll get at least some, but ideally all, of the money back.

So that's your first problem. No-one's going to lend you that kind of money unless you can give them some kind of security.

Your second problem is that the maths probably don't work out. Banks lose money on savings accounts, paying out interest, and earn money on loans, charging interest. It is highly, highly unlikely that you'll find yourself in a situation where you can get a loan at a lower interest rate than your savings, excluding minor promotional deals (i.e. a bank account that pays a high interest rate on the first $5,000, or a credit card offering 0% interest for 12 months). If you think about it, if bank A offers 5% interest, and bank B wants to offer out loans at 3%, then your plan might just work. But bank B would be much better off giving their money directly to bank A than giving it to you.

So, either way, it wouldn't work.

I think you're wrong saying banks lose money on savings, they just lend it to another customer at a higher rate. Even if they borrow from the BoE, it's likely to be only a fraction of what they lend at.

Either the OP is a bad troll or horribly naive.

Logically if people can borrow with a lower rate than the bank offers for savings, why would the bank bother with the risks involved with lending, they'd just invest the money themselves.

FireWyrm

snootyjim wrote: »

I don't know how much exposure you've had to this sort of thing, but to try to explain the situation as clearly as possible:

Banks are careful about who they loan money to. If they loaned you $1m, there's nothing to stop you spending the whole lot on a yacht and disappearing to an island somewhere, and never paying back a penny. You might claim that you're going to put it in a high interest account, or whatever, but what's to stop you withdrawing the entire lot?

If anyone wanted a $1m loan, the bank would expect something in return, i.e. a claim on your house, or a valuable painting, or anything, which guarantees that no matter what they'll get at least some, but ideally all, of the money back.

So that's your first problem. No-one's going to lend you that kind of money unless you can give them some kind of security.

Your second problem is that the maths probably don't work out. Banks lose money on savings accounts, paying out interest, and earn money on loans, charging interest. It is highly, highly unlikely that you'll find yourself in a situation where you can get a loan at a lower interest rate than your savings, excluding minor promotional deals (i.e. a bank account that pays a high interest rate on the first $5,000, or a credit card offering 0% interest for 12 months). If you think about it, if bank A offers 5% interest, and bank B wants to offer out loans at 3%, then your plan might just work. But bank B would be much better off giving their money directly to bank A than giving it to you.

So, either way, it wouldn't work.

I'll make it even easier.

No one in their right mind is going to lend an 18 year old $10,000 let alone $1,000,000.

Not a snowballs chance in hell.
The plan is dead in the water before it even gets started.