Post #4094909
2026-07-25 10:45 UTC
That's where Klarna makes its money: people who miss their burrito installment payments. However: if a Klarna borrower goes bankrupt before they've repaid the principle, Klarna *loses* money. A successful loan-book of unsecured burrito mortgages depends on the existence of many missed payments and few defaults.
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Replies (1)
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@pluralistic@mamot.fr 2026-07-25 10:45
"Financial innovation" is often a project to decrease risk in risky loans, but *without* decreasing the risk premium you get paid for issuing those loans. It's a way to eat your cake and have it too: even though you've reduced the likelihood that you'll have to write off your loan, you still charge the borrower as though that risk is unchanged. As with so many aspect of finance, "innovation in lending" is a way to shift value from the financial industry's customers to itself. 7/