Why is it that before a bank will give you a loan they want you to prove you dont actually need it?
Answers:
As Mark Twain put it -
A banker is a guy who lends you his umbrella when its sunny outside but wants it back at the first sign of rain.
Seems that way but they do want you to be able to pay it back.
They want you to prove that you'll be able to pay it back - that's the second step in "loan". A loan is for situations where you need more money immediately than you have at the time, but will be able to pay it back gradually - not just because you need more money than you have.
It's not so much that they want you to prove you don't need it... they want you to prove you'll pay it back. If you consider that from the bank's perspective you have come to them wanting money you don't have to spend on something else. Thus they see their money going to purchase something that won't bring them a profit or even guarantee they can get their initial investment back.
A loan from a bank in an investment in the person taking the loan. The bank has to look at that person in enough detail to determine if they are a good investment. If there is a question as to that person's ability to repay the loan (ie not a good investment) then the bank wants the collateral to insure they will have something to help get their investment back should it turn out that it was a bad investment.
Thing of it like this... you want to purchase some stock in a company. You will want to research and insure that your invest will not only bring you a profit but that the company is stable enough that you can at least get a major portion of your investment back. It works exactly the same for a bank.
Good luck!
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