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I did not know GPU backed loans was a thing. It seems risky.
by deepanwadhwa 1y ago
I did not know GPU backed loans was a thing. It seems risky.
- baggachipz 1y agoIt's not just, risky, it's insane. The GPUs lose value almost as soon as they're installed.
- lxgr 1y agoOn the other hand, auto loans are a thing. It’s all a question of how the assets are valued.
- baggachipz 1y agoDo you mean car title loans? Because that's basically what the GPU-backed loans are. Car title loans have terrible terms due to the diminishing value of the car. These GPU-backed loans are being booked at much, much more favorable terms, as if the GPU holds its value for a long time. This simply isn't the case, so if the loan is defaulted on, the loaner will have a rude awakening when all they get are worthless GPUs.
- rtkwe 1y agoIsn't that part of why down payments are so necessary? It takes the loan amount below the immediate depreciation amount of the asset so the bank/lender is less exposed to the risk.
- lxgr 1y agoI’d imagine the main benefit of downpayments to be behavioral, since otherwise the borrower has no stake in the asset initially.
- rtkwe 1y agoI doubt that's the main driver for lenders and people are generally pretty attached to and excited about their new cars. They also do have a stake they'll still be out time and money even if insurance covered the entire cost of the vehicle.
- lxgr 1y agoI wasn’t really thinking about people wrecking their cars, but rather about making future payments. Losing the use of a car and your equity in it to repossession is much worse than losing somebody else’s car alone.
- smsm42 1y agoI don't care as long as the bank losing on it wouldn't be bailed out with my money. Which unfortunately is a common thing now.