Thursday, August 8, 2019

Recommendation Essay Example | Topics and Well Written Essays - 500 words - 2

Recommendation - Essay Example Moreover, the availability of the loans could lead to high prices for the autos hence putting the consumer at a disadvantage. The paper presents the following recommendations to solve the issues presented in the case. The first recommendation is for the banks to reduce the period of repayment of the loan. The longer the period, the higher the risk because the political or economic environment may change over time. Another option on the same is to charge high interest rates on longer years of repayment and low interest rates on few years. By so doing, the consumers will be prompted to go for the fewer years and be sensitive to borrowing that will reduce their borrowing rate. The banks, on the other hand will also be able to get profits within a short period of time and be less vulnerable for offering the loans on a short term basis. Another recommendation is for the banks to base their lending on the payment history of the customers if they had previously borrowed the loans. However, for the new customers, the banks should relate lending to the income and payment abilities of consumers. Considering such elements will lead balance between the banks and their clients. The customers will not be strained to pay the loans while the banks will have a higher surety that the loans will be paid. Another recommendation to solve the problem is based on the root cause of high lending rates. The banks are said to be lending largely due recovery from to a recession period where many of them made big loses. Therefore, this paper recommends that such situation can be solved by government involvement. Government involvement, either through direct involvement or subsidies, could offer financial support to the banks or do away with the need for them to largely lend in order to increase the number of sales. It will also reduce the amount of borrowing from the public. Finally, instead of high lending rates, car scrapping

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